The 1998 financial report shows that SingTel, the largest telecommunications company in Singapore, has a huge reserve (cash and bank deposits) of S$4.44 billion. This is the company’s strength as not many companies have such large reserves. The debt-to-equity ratio1 in the last 3 years was also very low. In fact in 1997, it was just 0.05 as opposed to in 1998 and 1999 when it was merely 0.06. With such a huge reserve and low debt-to-equity ratio, SingTel is thus capable to generate internal funds as well as afford high demand of debt and equity to finance any expansion. For instance, the 1999 annual report shows SingTel was able to seize opportunities and invest substantially in overseas ventures (S$2.3 billion in 55 investments) during the 1990s. This goes to show that the combination of financial resources and its managerial capabilities had served as a source of competitive advantage for the firm over its rivals. The ability to invest substantially at any point of time is indeed valuable, rare, difficult to imitate and non-substitutable. As such, it is a core competence of SingTel.
Although SingTel has remained the profitable, we must also be cognizant with the fact that the company faced tough challenges in the recent years. Based on the financial performance of 1996-1999, the return on shareholders’ funds and total assets as well as the operating return on turnover and net fixed assets had actually declined. This indicates that the net return of the firm (or shareholders’ investments) and the effectiveness of SingTel in employing/ utilizing its inventory and total assets are no longer as good. The inability to effectively use its equity/assets is a possible weakness of SingTel. Organizational Resources:
In order to ensure continual growth and success, SingTel’s corporate structure was reorganized in March 1999 so as to cater to greater levels of diversification. The SingTel’s corporate structure resembles...