CREATING A COMPETITATIVE ADVANTAGE

IN SINGAPORE

CASE REPORT
CREATING A
COMPETITATIVE
ADVANTAGE IN
SINGAPORE
EXECUTIVE SUMMARY
Objective: This report seeks to create a competitive advantage for Yamato in the Singapore
market.

Current Issues: Yamato Singapores failure is due to entrenched government and small-scale
competition, cultural disinterest in proffered services, and an uncompetitive and unsustainable
pricing model.

Methodology: Utilizing SWOT analysis, this report will discuss Yamatos current strengths,
weaknesses, opportunities, and threats in the Singapore market. By focusing on the strengths
and opportunities, and minimizing the effect of weaknesses and threats, a competitive
advantage can be created that will make Yamato a major player in the Singapore shipping
industry.

Proposal: The report supports a three-step method that utilizes Yamato Singapores extant
infrastructure to combat Yamatos current underperformance in the Singapore market. By
customizing Yamatos strategy to meet Singapore customers needs, Yamato can use its
trucks to fill growing niche needs such as timed and after work hours perishable delivery. By
taking advantage of Yamato hubs in China, Malaysia and Taiwan, Yamato can also offer
affordable overseas shipping of both perishable and non-perishable goods, catering to both the
customers sending goods home to families abroad, as well as the constantly transitioning
business community.
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Exhibit 1: 3 Step process to create a competitive strategy necessary to compete in Singapore.

Abandon Japan-Copy-Cat strategy. Create

Singapore-centric plan accounting for cultural
preferences

Push Cool Ta-Q-Bin trucks and delivery time

selection to emerging online-perishable markets

Expand Ta-Q-Bin Collect to take advantage of

Singapore Customer-home-country Singapore
low lost gift remittences

Competitative
Advantage in
relevant product
offering and price
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Situation Analysis
Yamato Success in Japan and Expansion to Singapore

Yamato Transport Co. (Yamato) has been one of the premier delivery and takkyubin
companies in Japan since 19761. In 2010, Yamato controlled 42% of the delivery market. Its
strengths (Exhibit 2) include its Japanese-culture-designed high quality C2C delivery services,
its intricate distribution network, and its service agreements with conbini to act as delivery and
drop-off centers. Yamato also benefitted from a loyal and well-trained sales-driver workforce of
60,000. The SWOT analysis demonstrates the Yamato Japan is well designed for Japans
market. However, the threats are serious, and will ultimately undermine Yamato Japans
strengths as the market contracts due to the shrinking population.

Exhibit 2: SWOT Analysis describing Yamatos position in Japan

SWOT Analysis: Yamato in Japan

Strengths: Weaknesses:
Japans largest door to door delivery provider Known for overworking employees
(42% of market) Unable to keep up with demand from Amazon
Same day delivery within 600km of dispatch
Service until 9pm
Various services make travelling easier for
customers
Cold-shipping cool Ta-Q-Bin
Conbini agreements for pick-up/drop off
High on-time delivery record
60,000 loyal/trained delivery-drivers
o Japanese culture reinforces loyalty
Japanese culturally homogeneous

Opportunities: Threats:
Automatizing headquarters (Robotics technology) Population aging and decline
reduce overhead Government action on overwork
Growing number of women entering workforce Stagnated economy
Increasing online shopping (B2C) Mature market

Due to Japans low-birth rate and shrinking population, (See Appendix Ex. 1) in 2010 Yamato
decided to expand its services into international markets. It chose Singapore due to its
developed economy, high-standard of living, and what Yamato believed was a large potential
customer base. After heavily investing in necessary infrastructure warehouse, trucks,
employees - Yamatos expansion has not delivered expected profitability, and it continues to
lose market share to Singpost and other smaller independent delivery services. Yamato must

1 http://www.kuronekoyamato.co.jp/ytc/strategy/en/page04.html
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decide whether to remain in Singapore, and if it decides to do so, must then initiate a new
strategy to gain market share and profitability.

Singapore as market

Singapore is 5.6 million people concentrated in 719 sq.km, about 1/3 the size of the Tokyo
metropolitan area. Per-capita GDP in 2010 was $46,000 - similar to 2010 Japans. But GDP
growth rates are far more favorable in Singapore than Japan. (see Appendix Exhibit 7 and 8)
Singapore is largely an urban environment where Yamatos delivery-service models could, if
applied correctly, work well. However, population cultural preferences are far more varied in
Singapore, which is composed of four major ethnic groups: Chinese: 74%, Malay 13%, Indians
9%, and others 3.2%.2

Contrasted to Japan, where Japanese make up 98.5% of the population, cultural differences in
Singapore impact offering success. The C2C market is virtually non-existent in Singapore, as
many prefer face-to-face delivery of gifts rather than mailing. (See Appendix Exhibit 11)

The Singapore market is similarly accustomed as Japan to high service levels and high service
pricing, but cost/pricing structures for Yamato in Singapore have had to be 5x what Singapore
consumers have been conditioned to expect. Singapore consumers can rely on SingPost
services, which have access to mail lockboxes in the various apartment complexes and
homes. Due to Yamato regulations that packages may not be left at the door, Singaporean
citizens who use Yamato must be home to sign for their deliveries a nuisance for people
accustomed to being able to pick up their packages at leisure.

Exhibit 3: SWOT Analysis describing Yamatos position in Singapore

SWOT Analysis: Yamato in Singapore

Strengths: Weaknesses:
o Ta-Q-Bin Collect low cost to Japan, No key access to lockboxes (Singpost has
Shanghai, Malaysia, Taiwan, Hong access)
Kong3 Unknown in Singapore
o High Quality Culturally high turnover
o Choice-Time Delivery 5x more expensive than Singpost
o Agreements with Apple + Groupon C2C culturally undesirable
High customer turnover (expat heavy)
Singapore culturally diverse
Opportunities: Threats:
Growing on-line shopping usage Population aging and decline
o Cold delivery Stagnating economy
Robotics Driver profession not respectable
Focus on affordable delivery from ethnic High cost of equipment maintenance
groups to home countries Low cost local competitors
o Utilize infrastructure

2 http://www.singstat.gov.sg/docs/default-source/default-document-
library/publications/publications_and_papers/population_and_population_structure/population2016.pdf
3 http://www.kuronekoyamato.co.jp/en/business/solution/oversea/
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Japans Current Strategy in Singapore

When Yamato entered Singapore in 2010, they decided on a straight copy-cat strategy: From
the training manual to the hub and spoke model of infrastructure, Yamato Singapore was a
direct reflection of the Japan structure. Yamato Singapore is currently heavily invested in
regular and cool-type delivery trucks as well.

Exhibit 4: Yamatos Current Strategy in Singapore

Build
infrastructure

Copy-Cat Yamatos Continue to

Japan Current pursue C2C
strategy market
Strategy

Increase
Japan-style
training
regimes

Current Strategy and Cultural Failures

The current strategy is a poor fit for Singapores diverse cultural preferences. From the start,
hiring has proved difficult. While Yamato in Japan has traditionally relied on young hires hoping
for long term employment and young housewives to cover mid-morning shifts, Singapore has a
different outlook. Singapore residents are far more mobile in their jobs often having 10 jobs
over their lifetime vs Japanese workers having 3. Furthermore, a job as a delivery driver does
not hold the same respect as it does in japan, and customers are uninterested in speaking at
length with their delivery person. Instead, its purely business delivery and go.
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The Singaporeans do not have a combini-culture, preferring to visit a convenience store
seldomly and only to do business. Without the critical masses of conbini in Singapore as in
Japan, they do not make as useful and convenient a dropoff/pick up zone.

Exhibit 5: Singapore differences in conflict with the Yamatos copy-cat strategy

Hiring Accessibility Market

Job not No access to Business only-

respectable lock Boxes no relationship
Housewives 5:1 more desired with
unavailable expensive than delivery-person
main competitor No C2C market
No Combini-
culture for drop
off/collection

Why Stay in Singapore vs. Ending Operations

If Yamato leaves Singapore, ignoring the sunk costs of infrastructure, it will be abandoning an
ideal base for its current and planned incursions into SE Asia. Singapores central location and
its standing as a steady 1st world economy make it an excellent base and waypoint to distribute
packages to SE Asia.

Even if Singapore is abandoned as a market, the above obstacles to the traditional Japanese
business model will not go away, so the business model must change or be shifted into a
higher gear of services that people outside of Japan will appreciate.

Japans Proposed Strategy in Singapore

Short Term Strategy

Yamato should begin its transformation from within- starting with their hiring, training and
human resource management. Instead of trying to maintain the Japan practice of focusing on
the long-term employee, simplify training in expectation of eventual turnover. Further simplify
the training to focus on timeliness and customer satisfaction. Customers in Singapore are not
concerned with becoming familiar with their delivery person.

Yamato Singapore is currently heavily invested in regular and cool-type delivery trucks which
allows them to pursue a strategy focused on their cold and timed delivery competitive
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advantage. Appendix Exhibit 16 shows a modestly increasing trend in food and beverage
delivery; a segment Yamato should capitalize on, and a market that Singpost does not cater to.

Long Term Strategy:

Yamato should increase awareness of their competitively priced international post. Appendix
Exhibit 14 and 15 demonstrate that while Singpost international has a lower small-package
cost, Yamato can deliver much larger packages (cost determined by size rather than weight)
more economically. Singapore, with is varied ethnicities and transient populations, is a prime
candidate for international gift and other shipping from Singapore to Hong Kong, Malaysia,
Taiwan and Shanghai, among others. Appendix Exhibit 13 shows the Yamato hubs
internationally. Utilizing this infrastructure will provide value to customers in terms of high
quality, timely delivery. Some international routes even offer cool-shipping perfect for
perishable gifts.

Exhibit 6: Proposed Yamato Strategy: Short to long-term

Thrive by
Increase
Build pursueing
Time-Value- Build on a
Perishable B2C markets,
based Multinational
Delivery C2C
training Hub Strategy
Service International
regimes
remittances
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 Appendix:
Exhibit 7: Japans GDP versus Japan Population Growth Stagnant

Japan Sources: CIA World Factbook, https//www.cia.gov/library/publications/the-world-factbook/geos/ja. Also

International Monetary Fund www.imf.org/external/country/jpn/.

Exhibit 8: Singapores GDP versus Singapore Population Growth - Attractive

Singapore Sources: CIA World Factbook, https//www.cia.gov/library/publications/the-world-

factbook/geos/sn.html. Also International Monetary Fund www.imf.org/external/country/SGP/.
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Exhibit 9: Japans GDP versus Singapore GDP Growth Rates Advantage Singapore

Japan Sources: CIA World Factbook, https//www.cia.gov/library/publications/the-world-factbook/geos/ja. Also

International Monetary Fund www.imf.org/external/country/jpn/.

Exhibit 10: Japans Population Growth versus Singapore Population Growth Advantage
Singapore

Singapore Sources: CIA World Factbook, https//www.cia.gov/library/publications/the-world-

factbook/geos/sn.html. Also International Monetary Fund www.imf.org/external/country/SGP/.
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Exhibit 11: How Japans reliance on traditional markets fails to match Singapore market

Source: Company Presentation, February 8, 2012

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 Exhibit 12: How Japans reliance on traditional Employment fails to match Singapore market

Yamato Japan Employment Profile

Yamato Singapore Employment Profile

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Exhibit 13: Yamato has Substantial Multi-National Assets and Trans-Shipment Opportunities

Source: http://www.y-logi.com/ylc/english/network.html

Source: https://www.yamatosingapore.com/international-ta-q-bin/
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 Exhibit 14: Yamato International Shipping Rates are well-Understood and well-Managed

Yamato Singapore International Shipping Rates

Parcel Size Document 60 80 100 120 140 160

Volumetric Size Up to 1Kg Max 60cm Max 80cm Max 100cm Max 120cm Max 140cm Max 160cm
Rates
(Japan, Shanghai, Taiwan S$25 S$50 S$100 S$150 S$200 S$250 S$300
& Hong Kong)

Rates
(Malaysia Kuala Lumpur,
S$20 S$30 S$60 S$100 S$120 S$140 S$160
Putrajaya & Penang states
only)

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Exhibit 15: SingPost cost structure for comparison with Yamato

SingPost International Cost Structure:

Quickly becomes more expensive than Yamato with low weight allowances.

Destinations Air Rate Surface Rate Max.

(Zone) Weight
1st 5kg Addl. kg or 1st 5 kg Addl. kg or
part thereof part thereof

Zone A Malaysia $16.00 $3.00 N.A. N.A.

Zone B Brunei,
Hong Kong,
Indonesia, $30.00 $5.00 $18.00 $2.00
Philippines,Taiwan
and Thailand

Zone C China,
India, South
$30.00 $5.00 $18.00 $2.00
Korea#, rest of
Asia and Oceania 30 kg
per
Bag
Zone R Australia#, (20 kg
Japan# and New $40.00 $7.00 $20.00 $2.00 for UK)
Zealand

Zone S United
Kingdom#,
Germany#, $50.00 $9.00 $25.00 $2.00
Europe, USA and
Canada

Zone T Africa,
Middle East and $50.00 $9.00 $25.00 $2.00
rest of the world

Source: http://www.singpost.com/postage-rate
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Exhibit 16: Online Sales Generate Shipping Revenues Global Statistics through 2011

Source: E-COMMERCE IS EATING THE WORLD AND THERES STILL ROOM FOR
DISRUPTION - Future of e-commerce, by Singapore online grocery store Redmart founder Roger
Egan http://www.innovationiseverywhere.com/future-e-commerce-trends-singapore-based-
redmart-founder/ 15