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The Applicant Series #3: PESTEL

The Applicant Series showcases works done by hopeful writers who have applied with inkmypapers over the years. The results and comments will be provided first, followed by the actual essay/report written by the applicant

Applicant’s Results: Failed

Title: This is a 1200 word entrance test for our business writers. They are told to work on PESTEL, Porter Five Forces and SWOT analysis on a local Singaporean company and then provide recommendations based on the analysis.

Comments: This applicant did not do too well for the piece. There is problem with grammar, spacing and spelling. Her analysis for PESTEL and SWOT are also less than ideal. The PESTEL analysis for instance, touch on points that are ultimately inappropriate for providing recommendations. It mentioned points that are indicative of Singapore’s environment, but did not include trends for which can be used to recommend actions that OCBC can take. As compared to a better piece done by another applicant, this is much worse.

We rejected this applicant.

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Oversea-Chinese Banking Corporation Limited is one of the oldest banks of Singapore, founded in 1992 as a result of the merger of three local banks. As of today it is the second largest financial services group in terms of assets and boasts a Aa1 rating from Moodys.Making it one of the world’s highest ranking banks.OCBC also ranks as the world’s  third strongest bank (Bloomberg, 2015).With over 400 branches and operations in 15 countries OCBC offers a variety of financial services including but not limited to consumer , corporate , investment , private and transaction banking and treasury , insurance , asset management and stock broking services.

The purpose of this report is to analyze the macro and micro economic factors affecting OCBC banks operations in the Singapore market. We shall be using different analysis tools such as PESTEL analysis, Porters 5 forces and SWOT analysis in order to derive practical and beneficial recommendations for OCBC.

PESTEL Analysis

In order to thoroughly analyze the external environment a PESTEL analysis will be performed.PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal factors of the external macro environment. These factors are usually beyond a company’s scope of control and may pose as opportunities or threats for the company in question.


Singapore has been ranked third worldwide in the report for global competitiveness 2016-2017 (World economic forum, 2016-2017), the criteria for which is the degree of corruption, tax rates, trades and foreign exchange controls etc. This report recognizes Singapore as the most transparent country in all of Asia with a stable business environment.

With respect to the banking industry in particular. The government has maintained a relatively stable and safe political climate giving underway to productive business practices. The government has maintained lucrative corporate tax rate of only 17% whereby banks receive up to 30% corporate income tax rebate per year. (Inland revenue authority of Singapore, 2017).This clearly means that investors are not subject to harsh tax regimes, capital tax gains, dividend tax and rigid foreign exchange controls. All the above factors encourage international banks and financial groups to establish operations in Singapore.


US based research institute Business Environment Risk Intelligence (BERI) has ranked Singapore first out of 50 countries as the best investment destination in Asia and second best worldwide. (Intelligence, 2016). According to Singapore Ministry of Trade and Industry, the banking industry has boosted the overall GDP by up to 40% (Singapore Ministry of Trade and Industry, 2015).

On the flip side it is one of the most open economies in the world which makes it vulnerable to global external shocks which can badly disrupt financial wellbeing of the economy.

Another clear disadvantage for Singapore is that its economy is slower than China and the US economy recovery which means it is adversely effected by external economic factors beyond its control. Due to which banks such as OCBC will require strong forecasting capabilities in order to cope with market uncertainty.


The Global Innovation Index has ranked Singapore as the best performing country in Global Innovation. (Global Innovation Index, 2015).This report ranks 141 countries on the basis of human capital and research, infrastructure, market sophistication, knowledge and creativity output. It is also termed as the most “ network ready country “ in the world (Global Information Technology Report, 2015).OCBC bank has taken full advantage of tech savvy environment and has recently launched its HR mobile app “HR in your pocket “which is the first of its kind I the country backed by artificial intelligence. The app is expected to be a game changer for OCBC in the digital banking arena. (Singapore Business Review, 2017)

Porters 5 forces

In order to analyze the competitiveness of OCBC’s immediate environment porter’s five forces will be used as the primary tool. According to Porter the state of competition in an industry depends on 5 factors all of which are analyzed in the length of this report.

Threat of new Entrant

Owing to Singapore’s transparent government policies, technological advancements, abundant supply of skilled labor and conducive legal environment. Singapore is Asia’s top investment hot spot (Intelligence, 2016).Hence, opening the avenue to new financial service providers and banks. New entrants may offer lower loan interest rates, longer life insurance policies or better coverage policies thus threatening OCBCs business.

Threat of substitutes

A substitute product is one which performs the same function as an existing product. In most recent times traditional banks such as OCBC face a threat from “Fintech”, a new wave of startups and disruptive technologies offering consumers greater accessibility and ease in availing financial services. According to a report by PWC (PriceWaterHouseCoopers, 2016) traditional financial companies are being challenged by new innovative companies offering services more suitable to the consumer’s needs. According to (Fintech Survey , PWC, 2016) consumer banking and fund transfer payments are likely to be the most disrupted sectors by 2020 owing to FinTech.

Threat of Bargaining Power of Buyers and Suppliers

In case of banking and finance industry the balance of power is tilted in favor of the customer. The primary reason for this is the stiff competition posed by numerous players in the Market.OCBC is neck to neck with other local and international banks. The Customers will always be pushing the bank to offer higher quality and variety of services for a lower price. Whereas , banks such as OCBC will have to withstand the pressure and continue to offer value for money to its customers in order to sustain its profitability and strength in the market.

Threat of Rivalry among existing Firms

OCBC bank has been ranked as one of Singapore’s strongest banks and it has direct competitors both local and international. According to (straittimes.com, 2015) in a report published by Moody’s OCBCs top competitors include Development Bank of Singapore and United Overseas Bank Ltd. As compared to OCBC, UOB has higher investments in markets outside Singapore which lowers its country related risk. Whereas, DBS holds an upper hand in terms of capital market gains when compared to OCBC .Furthermore, OCBC greatly relies on earnings from its investment arm.The nature of this revenue is highly uncertain ranging from 5 % to 32% subjecting OCBC profits to higher volatility when compared to its competitors.


In order to derive effective recommendations it is necessary to analyze the internal environmental factors influencing OCBC.For this purpose a detailed SWOT analysis will be performed highlighting the company’s internal strengths and weaknesses and plausible opportunities and threats.


  • Largest Bank in Singapore, High Credit Rating resulting in capability of fulfilling financial commitments.
  • Wide variety of financial services generating various revenue streams.
  • Market leader in digital innovation, introduction of “HR in your pocket app”. (ocbc.com, 2017)
  • Vast funding base spread worldwide.


  • Largest local bank in Singapore, but smallest bank on global stage.
  • Major revenue streams relying on business in Singapore and Malaysia. Hence, increased risk in case of financial distress in either country.https://en.wikipedia.org/wiki/OCBC_Bank
  • Limited success beyond core business.
  • Financial planning is not very apt as suggested by the current asset and liquid asset ratio.


  • Expansion in new markets like China and India with greater demand for financial services owing to rising Asian wealth.
  • Growth of small and medium size enterprises in the Asia.


  • Growing strength of local distributors, encouraging competition to pay higher margins.
  • Emerging startups using disruptive technology.(Fintech Survey , PWC, 2016) Offering better products at lower price.
  • Entry of international players in the Singaporean market as Singapore is the best place in all of Asia for investment.(Intelligence, 2016).


In view of the aforementioned macro and micro economic factors it is highly recommended for OCBC to increase investment in development of technology and innovation to be able to challenge Fintech enterprises head on. At the same time OCBC has the advantage of a strong capital base and intrusive global network, which it can use as an advantage to reach a large customer base in order to offer new profitable and innovative products. It is also advisable for OCBC to invest in other lucrative markets such as China and India since consumer income is growing in these regions and so is the demand for reliable financial services. At the same time OCBC should focus on trying to generate new revenue streams instead of primarily relying on insurance since this will help reduce risk and increase the revenue pool.


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