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Strategic facilities management of Suntec Singapore International Convention and Exhibition

Centre: A case study

Tay, Linda

Abstract

Purpose - This paper aims to highlight how facilities can enhance the strategic competitive position of a business organization.

Design/methodology/approach - The methods of investigation used in this study include observation, in-depth interviews and secondary data.

Findings - This case study has shown that both hardware, i.e. facilities and software, i.e. business philosophy of the organization are important to enhance its competitive position.

Research limitations/implications - This study has looked at only one case. Future research may use the same five-force model to assess and determine the contribution of facilities to the competitive position of a business organisation.

Practical implications - This study hopes to create more awareness among senior management of the strategic importance of facilities to a business's bottom-line.

Originality/value - Using a strategic management model, this paper illustrates the contribution of facilities management to the broader corporate goals.

Keywords Competitive advantage, Modelling, Market orientation, Strategic management, Facilities

Introduction

The convention and meetings industry is today growing rapidly. While its absolute contribution to a country's national gross domestic product (GDP) may be small, the spillover effect is significant for the tourism sectors such as wholesale and retail trade, hotel and air transport. A study conducted in Singapore showed that for every $1 contributed by this industry, another $12 is generated in the national GDP (International Enterprise Singapore Press Release, 2001). As a result, many destinations around the world have invested in the construction of convention centres (Oppermann, 1996). In particular, the Asia-Pacific region has seen rapid

increase in industry activity since the late 1980s. In its latest projection, the Union of International Associations (UIA) predicts that only Asia will experience a positive 14.9 per cent growth in the next two years (UIA, 2005). The convention and meetings industry is a significant contributor to the Singapore economy. With its strategic geographical location, Singapore has performed consistently well in attracting major conventions (e.g. Asian Aerospace). Singapore was also identified as the top competitor for the Australian convention and meetings industry (Weber and Ladkin, 2003).

Studies have shown convention facilities to be an important factor for the success of a convention centre (Hazinski and Detlefsen, 2005; Weber and Ladkin, 2003). Thus far, studies on convention centres have consistently focused on the technical systems of convention facilities Qalayerian, 1996; McMorrow, 1996). There has been a vacuum in studies that links convention facilities with business performance, i.e. the strategic management of facilities. Consequently, the purpose of the case study is three-fold. First, it seeks to inform the state of facilities management practices within a convention centre in Singapore. This paves the way for future comparative research on facilities management practices within convention centres; especially those in Asia since this is the fastest growing region for the convention and meetings industry. second, since technology has been a key focus in convention centre research, this case evaluates the sustainability of technology as a competitive advantage. Finally, the case study aims to highlight how facilities can enhance the strategic competitive position of the convention centre business through a strategic management framework, i.e. Porter's five-force model.

The case study begins with a literature review of the relationship between facilities and business performance. Key concepts that underpin this case study such as competitive advantage and the five-force model will be introduced here. Next, the case will describe the creation, business philosophy and the facilities of Suntec Singapore International Convention and Exhibition Centre. Following this, the case evaluates whether technology can be a source of competitive advantage for Suntec Singapore and illustrates the role of facilities in enhancing the competitive position of the convention centre. Finally the case study closes with some concluding remarks.

Facilities and business performance

The last three decades have seen the rise of many performance-enhancing theories for

business organizations. Whereas these theories have been extensively researched and applied in industries such as hotel, human resource management, marketing, manufacturing, etc. only a handful of studies have been undertaken within the facilities management industry to examine the link between facilities management and business performance.

One notable study was carried out by Alexander (1992) who applied the total quality management (TQM) concept and posited that quality managed facilities will help an organization achieve key objectives. The TQM paradigm emphasizes the use of external-based quality goals, the use of cross-functional teams, widespread employee involvement in the quality improvement process, and the use of process design and control techniques to ensure conformance (Oakland, 1989; Grant et al., 1994). Alexander (1992) concluded his work with a quality plan for facilities management but noted that it will take time for benefits of many of these quality initiatives to emerge, although there may be short-term improvements. Tranfield and Akhlaghi (1995) related facilities to business performance indicators through a strategic capabilities approach. According to the authors, this approach focuses on the design of routines (co-ordination through systems, procedures and structures) for long-term, continuing performance improvement. The authors argued for the relevance of key integration indicators such as the degree of teamwork, standardization of inputs and cultural reinforcements for improving facilities management performance.

A closely related concept to strategic capabilities is the idea of competitive advantage. Just as strategic capabilities focuses on developing internal capabilities of the firm, competitive advantage extends the concept by looking at internal capabilities that will produce a sustainable positional advantage, i.e. superior customer value and/or lowest delivered cost. There are two basic sources of competitive advantage: superior skills and resources. Barney (1991) lists four essential requirements for a resource/skill to be a source of sustainable competitive advantage:

(1) it must be valuable;

(2) it must be rare among a firm's current and potential competitors; (3) it must be imperfectly imitable; and

(4) there must not be any strategically equivalent substitutes for this resource/skill.

In line with this perspective, there have been many attempts to empirically derive \competitive strategies (Miller, 1986; Kim and Lim, 1988). Many of these conceptualizations have

been influenced by the work of Porter who first published a book on Competitive Strategy (1980) followed by Competitive Advantage (1985). Porter asserted that in order to derive a competitive strategy, the organization must first evaluate its position within the industry against five factors: power over buyers, power over suppliers, barriers to entry in the industry, the threat of substitute products, and the overall level of rivalry within the industry. Figure 1 diagrammatically portrays Porters' five-force model.

While there has been many performance-enhancing models developed over the years, the five-force model has received strong support from within the property and facilities industry as a strategic management framework in understanding the role of facilities in business performance. O'Mara (1999) suggested that a thorough understanding of a firm's competitive strategy is required before determining the best property and facility strategies. This understanding begins with a clear diagnosis of the forces of competition within the industry. From here, it is clear that the five-force model complements the other strategic management concepts such as TQM and strategic capabilities in that it provides an assessment of the external environment in order that a competitive strategy may be developed through the firm's internal capabilities. Similarly, Edwards and Ellison (2004) considered Porter's model to be sufficiently well developed and flexible to be capable of broad application across a range of different business types. This allows the properly and facility implications to be explored over a range of different strategies applied to different organisations. The cogency of the five-force model is thus well-positioned for this study.

The next section provides the background information to Suntec City by describing its creation, business philosophy and facilities. This then serves as a backdrop against which the role of facilities in enhancing the business performance of Suntec Singapore International Convention and Exhibition Centre will be evaluated. The creation of Suntec City

Located on 11.7-hectare of prime land adjacent to the Central Business District in Singapore, Suntec City is the single largest integrated commercial development with five office towers, a shopping mall, and an international convention and exhibition centre (Suntec Singapore) with a total of 7 million square feet of space. Suntec City Development Pte Ltd was formed by 11 Hong Kong tycoons in 1988 through a winning bid of S$209 million for the land. By 1997, Suntec City was completed and today offers direct access to 5,200 hotel rooms, 1,000 retail stores, 300

restaurants and the region's new centre for the performing arts, Esplanade - Theatres on the Bay. The business philosophy

In the early days, Suntec City was called a bowling alley by the press because of the lack of visitors. Many attribute this to poor location as Suntec City was not near enough to prime office and shopping locations. In response, Suntec City defined a niche for itself as Asia's Vertical Silicon Valley by embracing technology and today has an occupancy rate of more than 95 per cent for its office and retail properties.

According to its CEO, Mr Wong Ah Long, a critical success factor for Suntec City is an open style of management that views criticisms as a source for improvements and swiftly responding to them. At the same time, Suntec also adopts a business concept termed facilities service provider (FSP). The FSP concept transforms the traditional role of a landlord to that of a business partner with its tenants through strategic partnership, business alliance and constructive connectivity. Under this broad FSP concept, many IT initiatives have been implemented. These include:

* broad band access via fibre optic cable to enable internet communication among tenants; * incubators for start-up companies which comprise shared office space, management and administrative services, and access to capital via a network of investors and a virtual set-up for companies that do not need physical space;

* a community web portal, with intranet capabilities, to enable tenants to shop, sell, acquire goods and services, book restaurants and/or travel reservations; etc.

* common telecommunications connection that enables tenants to communicate with each other at no cost, thereby encouraging networking among tenants; and

* an internet call center enables tenants to provide online customer support for their web sites to build relationships with their customer and boost online sales.

Suntec Singapore International Convention and Exhibition Centre (SSICEC)

One of the key facilities of Suntec City is its convention and exhibition centre - Suntec Singapore. It has total gross area 100,00Om2 and is one of Asia-Pacific's largest purpose-built venues. The six-storey centre was built at a cost of S$620 million. Since its opening, Suntec Singapore has won many awards with its standards of service, security and facilities and has hosted 1,356 and 1,288 events for the years 2001 and 2002, respectively. Suntec Singapore's vision is to be \

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