ECO GROUP OF COMPANIES

Strategic Analysis
Waste Management (Singapore: EGC)

SUBMITTED TO:
Institute of Certified Public Accountants of Singapore

12 Aljunied Road,
#04-02 KH Plaza @ Aljunied,
Singapore 389801

BY: Smita Salil Mhatre

Candidate ID - (S7979820G)

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
 VISION

“To be the waste management company of choice”

MISSION

To help organisations manage their waste efficiently and safely through comprehensive
waste minimization, recovery and disposal solutions thereby adding value to their
operations and complementing the social efforts of building a cleaner and safer
environment.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Eco Group of Companies is a unique blend of core competencies and capabilities has served

them well within the waste management industry. This analysis will fully investigate the ability

of the organisation to exploit growth opportunities in a slow growing, but expanding industry.

Key Points:

 Driving forces which affect the external environment in which waste management

companies, such as Eco Group of Companies, operate in are: regulatory influences and

government policy changes, fuel prices, and new technology that would reduce

significantly needed landfills.

 Key success factors which influence the market and fashion successful companies

include the following: rights to acquire and possession of landfills, the ability to control

operation costs, and the human factor within the firms.

Current Strategy

 Eco Group of Companies current strategy is to achieve operational excellence in order to

be successful for their stockholders.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Behind the luxury and convenience of modern living lies the real price of this industrial

production the generation of hundreds of million tons of hazardous and non-hazardous waste

every year.

This pattern follows the general trend in early economic growth described by the environmental

Kuznets Curve (Kuznets 1995, Barbier 1997). This development model, together with new

lifestyles associated with greater affluence, has led to rapid changes in consumption patterns, the

generation of large quantities of waste and changes in waste composition. These are the drivers

behind exponentially growing waste management problems in Asia and the Pacific.

Although most countries in Asia and the Pacific have ratified the Basel Convention on the

Control of Trans-boundary Movements of Hazardous Wastes and their Disposal, the region as a

whole lacks a common approach to the import of hazardous wastes.

Asian markets hold very good longer term potential for waste management companies in most

areas of solid and hazardous waste management. The Asian market for solid and hazardous

waste management was estimated at approximately $3.0 Billion (US) in 1995 by EBI.

Demand is driven by an increasing awareness of environmental concerns, coupled with a high

level of environmental focus by international financial institutions (IFIs) and non-governmental

aid organizations (NGOs) who direct a very large amount of effort to this region. Most

internationally funded investment projects now mandate that proper environmental studies and

controls are in place.

The recent decline in the Asian economy has had an impact on the potential market for services

in the near to middle term. The impact will be felt most strongly on product sales and services to

the private sector, which require hard currency or local financing. For this reason Asian markets,
ECO Group Of Companies
40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
particularly those in countries most affected by the economic setbacks such as Thailand, Korea,

Malaysia, and Indonesia, may not be as attractive in the short term. However, the need for waste

management will not disappear and service will be required at some point.Over the past two to

three decades in Singapore, rapid industrialization and economic development have caused a

tremendous increase in solid waste generation. The yearly disposed solid waste increased from

0.74 million tones’ in 1972 to 2.80 million tones’ in 2000. Solid waste management in Singapore

has traditionally been undertaken by the Ministry of Environment (ENV), with the participation

of some private sectors in recent years. The hierarchy of solid waste management in Singapore is

waste minimization (reduce, reuse and recycle or so-called 3 R’s), followed by incineration and

landfill which is the most preferred disposal method. Waste minimization, the utilization of

incineration ashes, industrial waste management is regarded to be the major challenges in the

future.

Singapore Industrial production growth rate

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of February 19,

2010

GDP per capita in selected countries in Asia and Pacific Region (source: GEO 2000)

Singapore was given the top rating for the overall quality of its environment survey covered 12

Asian territories. It also topped the list in managing air pollution, traffic congestion and for its

attractiveness for foreign direct investment.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Technology affects not only the waste management industry, but many other industries as well.

Recent developments in waste management technology are providing new ways to clean up

industrial wastes and yielding efficient new production methods that are less polluting than

traditional processes. Waste management technology can even help convert industrial and other

wastes into useful products. All of these technological changes create new business opportunities

for EGC. While they use these technologies, they need to work with the ENV co-operatively

because the ENV may not approve all of the technology for the waste management industry.

Also, markets for waste treatment plants, equipment and instruments are becoming uniform in

the global arena. It will boost international cooperation in the development of products and

services utilizing the new technology. The program is an excellent opportunity for EGC.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
 Strategic Group Map

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
 The Porters Five Forces Model is a market opportunities analysis model

Threat of Entrants: LOW

•High investment Threat
•Strict regulations Of New Buyer Power:
•High exit barriers MODERATE
Entrants
LOW •Commercial & business
•No cross border labor customer: make own
choice

Bargaining Competitive Rivalry:

Power of
Rivalry Bargaining MODERATE
Suppliers Power of Buyers •Slow industry growth
HIGH MODERATE MODERATE in Singapore
•High strategic
stakes
Supplier Power: HIGH
•Intense competition
•Unionized Labor LOW
•Strong, big suppliers Threat of
•Pay premium for license Substitutes
& rights
Threat of Substitutes: LOW
•Few to zero substitutes for
Waste Management

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Competition

A few players in the region, the competition is fierce because of powerful customers

who prefer a modern and consolidated service provider for their national operations.

In addition, customer loyalty to a particular provider is low due to short renewal

contracts. Demand for environmental services is growing at a very slow rate,

coupled with powerful customers and low loyalty proves that the industry is fiercely

intense.

In the growing industrial world disposal of the waste have been a key agenda for any

company but more important is the way the waste get dispose off. Many companies

nowadays are seeing this in a way to generate revenue. It has attracted many

companies to find innovative ways to dispose of waste. E.g. absorve is used in

preparation of road in Singapore.

New entrants: Entry for the new entrants is mainly driven by the capacity to have

expertise and resources in handling waste. For a startup its very difficult to get land

and technology know how to setup the business.

End users/Buyers: In this type of industry it important what kind of product can be

generated. Majority of the industrial waste is in form of water pollutant with the

increasing government and international regulation buyers are keen to ensure that

the wastes are properly disposed. Also emphasis is on recycling of the product at

minimum cost.

Suppliers: Eco group have already have the technological know-how, and have

already started to build the processing facilities to support this type of future

technology. Facilities to process waste are normally huge in size, modern, and in

compliance with strict federal regulations. They require strong, large, and competent

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
companies to design and make them. As a result these equipment suppliers have

bargaining power over the players in the industry.

Substitutes: Industries have no other option other than to develop their own waste

management strategy or to rely on specialist like Eco group of companies. With ever

growing stringent government regulation industries have no option but to rely on

Specialist Company to take care of their industrial waste and generate some revenue

through waste disposal.

Complementary products/ the government/ the public: Companies need to

continue to improve relations with governmental agencies that have the power to

revoke any operating licenses. The Waste Minimization Unit of the Resource

Conservation Department (RCD) within the national Environment Agency (NEA) is

to formulate policies to promote and spearhead waste minimization in Singapore.

The Unit develops, promotes and oversees the implementation of program on waste

minimization and recycling. It also carries out studies to enhance waste recycling. In

addition to regulatory controls, the co-operation of industries in ensuring that

hazardous wastes are properly managed and disposed of in Singapore is essential.

Companies continue to participate in international events on the Basel Convention

and adopt and practice the principles of Basel Convention in dealing with Tran

boundary movements of hazardous wastes.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
ECO group of companies:

ECO business involves mainly waste management in the industrial and commercial

industries with forte in hazardous and non-hazardous waste. It also provides third-

party environmental laboratory services, consultancy services and conducts R&D

programmers on waste treatment processes and environmental technologies. ECO

Special Waste Management provides comprehensive waste management solutions to

customers by offering one-stop services and facilities to treat both hazardous and

non-hazardous wastes.

ECO Industrial Environmental Engineering Pte Ltd: ECO-IEE is the corporate

headquarter of the group and has three wholly-owned subsidiaries namely ECO

Special Waste Management Pte Ltd (ECO-SWM), ECO-SWM - Provides waste

management solutions for hazardous wastes, ECO Resource Recovery Centre Pte

Ltd (ECO-RRC) - provide waste management services for industrial solid non

hazardous wastes And ECO Energy Recovery System Pte Ltd (ECO-ERS) :

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
Centralized collection of internal drainage water with the aid of oil interceptor and

oil skimmer is our practice towards minimizing water pollution.

The corporate vision identifies where the firm’s orientation for the future is in order

to best serve stakeholders’ needs. The vision incorporates current realities and any

expected future conditions to create an ideal scenario within a relevant time frame

the vision statement is trying to achieve the best-in-class in each part of their

business for the future.

Value Chain Analysis

In today’s environment, it is becoming ever more critical for firms to develop

sustainable competitive advantages. In order for decision makers to develop this

advantage, they must also understand their own firm’s resources and capabilities, as

well as be able to evaluate these strengths and weaknesses in terms of competitive

advantage. Value chain analysis provides strategic decision makers a systematic

technique for scanning their internal organizations. By focusing on competitively

relevant strengths and weakness, decision makers can better see the potential of

these resources and capabilities for adding or subtracting value to the firm’s

processes. This understanding can then lead to generic strategies that will most

likely lead to sustained competitive advantage.

Company’s current strategy is to achieve operational excellence in order to be

successful for their stockholders. The Company’s plan for growth will be grounded

in margin expansion from better pricing while continuing to cut costs, and they will

apply a disciplined approach to growing their returns from new capital investments.

The Company plans to pursue operational excellence by focusing on what they are

doing well, particularly by focusing on the areas of safety, maintenance, and

productivity. They are committed to finding the best practices throughout their

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
organizations and standardizing those practices and processes throughout the

Company

Establishing National Recycle Goals and Packaging Standards

This strategy responds to threats of government regulations and landfills and also

simultaneously creates golden opportunities for WMI. By working in conjunction

with the government, EGC can possibly minimize the government regulations and

create some items to their favor. With increasing consumption, landfills are

becoming full and the numbers of available landfills become limited. This initiative

will try to urge consumers to recycle and buy reusable items, and promote the

company.

Alternative 2: Deploying Automated Trucks to Pick up Solid Waste (Threat and

Strength)

As with other firms in the industry, EGC employs a lot of human labor for it

services. This particular resource represents a large piece in EGC’s cost and its

union, in certain conditions; this would be a challenge for EGC. This alternative

favors using EGC’s strong cash in hand to deploy fleets of automated pick up trucks

in residential-customer segments. This would significantly reduce EGC’s

dependency on human labor and dramatically lower operating costs contributed by

human labor costs.

As based on research and analysis, two solid recommendations that will enable

Company to remain competitive within the waste management industry.

1. Convert fleet to alternative fuels

2. Expand Waste-to-Energy

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
The Future of Eco Group of companies: New Products/Services

In order to take advantage of opportunities within the market Eco group will need to

continue their focus on energy generation. This will come in the form of increasing

the waste-to-energy production facilities and continual improvement in waste-to-

energy processes. Money should be allocated to research and development in order

to stay ahead of other competitors and look for continuing alternatives for waste

disposal. Eco groups will also need to continue to improve and focus on recycling

programs to support the more environmentally friendly customers and look at

expansionary opportunities. There is also the opportunity to better utilize existing

resources to generate increases in revenue.

Possible Merger and Acquisitions:

Eco Group will need to continue their focus on environmentally friendly practices

and maintain there compliance with governmental permit regulations. They will

need to continue their acquirement of new competencies in environmental disposal

and recycling programs, to minimize their impact on the environment. They will

also continue to make customer service process improvements and change to meet

the needs of the growing customer segments. It should continue to keep its current

base of customers and operating segments. Waste Management’s current revenue

segments include collection, landfill, transfer, recycling, and waste-to-energy. They

will still focus on municipalities, industrial, commercial, and residential customers.

It is anticipated that Waste Management will move further into the areas of

recycling, and waste-to-energy as America moves toward a goal of zero waste. This

could lead to a slight increase in commercial or industrial customers seeking more

environmentally friendly solutions. Looking at the present demographic of Eco

Group of companies, it make a ideal to be acquire by large companies who wants to

leverage on its presence in Singapore and technology Know-how.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
In conclusion, after analyzing global environment surrounding Eco Group of

Companies we discovered a significant driving force involving rapidly changing

socio/political arena which could trigger strategic change in the industry. In

addition, we identified key success factors which the firm should take into serious

consideration while structuring strategic decision and continuous improvement

programs. Of special note is the benchmark capability of effective operating cost

management with regard specifically to transportation. These influencers led to our

recommendations regarding fuel conversion and capital expansion into waste-to-

energy. By adjusting fleet operations, the firm is better able to develop its ability to

mitigate risk from volatile oil prices. And in diversifying into the waste-to-energy

industry, Company faces a future in an emerging industry, with lessened risk

exposure due to the changing nature of the environmental services sector. We

strongly recommend immediate implementation of our action plans, which will help

to ensure Companies continued competitive advantage and industry leading position.

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
References:

http://www.eco.com.sg/english/index.htm

http://www.frost.com/prod/servlet/report-toc.pag?repid=P114-01-00-00-00

http://www.unep.or.jp/ietc/publications/spc/State_of_waste_Management/2.asp

http://www.singstat.gov.sg/

http://www.singstat.gov.sg/stats/themes/economy/indprd.html

http://www.singstat.gov.sg/statsres/ssc/ssic2010.html

http://www.unep.or.jp/ietc/publications/spc/State_of_waste_Management/3.asp

http://www.unep.or.jp/ietc/publications/spc/State_of_waste_Management/4.asp

http://www.gdrc.org/uem/waste/continuum/continuum.html

http://unep.org/geo/geo4/report/GEO_Report_Full_en.pdf

Michael E. Porter, especially the 1998 book Competitive Strategy: Techniques for

Analyzing Industries and Competitors (Free Press).

Asian Development Bank (2003), Asian Development Outlook, Competitiveness in

Developing Asia: Taking Advantage of Globalization, Technology, and Competition

in Part 3, Manila.

http://www.adb.org/Documents/Books/ADO/2003/part3.asp

http://www.wastemanagement.com/

Waste Management Inc., SWOT Analysis. October 2005. p.1-10. Business Source

Premier.Waste Management to Cut Jobs. By Jim Johnson. Waste News. August

2005. Vol. 11, Issue 7, p.1-21.

www.houstonchronicle.com

BW Online | February 1, 2002 | Salomon Lowers Waste Management “Outperform.”

http://www.businessweek.com/investor/content/feb2002/pi2002021_880

http://www.mswmanagement.com/msw_0007_history.html

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133
http://www.investor.reuters.com/business/IndustryOverview.aspx?industry=WASTE
M&target=/business/bussecindustry/bussecindfake/bussecindoverview

http://www.singstat.gov.sg/pubn/reference/yos10/yos2010.pdf

http://www.ban.org/main/about_BAN.html

ECO Group Of Companies

40 Tuas West Road, Singapore 638389
Tel: (65) 6517 3600 Fax: (65) 6862 0133