Mustika Ratu Repisi

7/27/2019 Mustika Ratu Repisi

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Business Strategy

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MUSTIKA RATU:

NAVIGATING THROUGH SOCIAL AND ECONOMIC CRISIS

COMPANY BACKGROUND

The founder, Ny. B.R.A. Mooryati Soedibjo, throughout her youth, she acquired

considerable knowledge of Javanese history and culture and, from her grandmother, a unique

expertise in the formulation of jamus and cosmetics. Jamus were health supplements,

traditional medicines and cosmetics made from local plants and herbs and available in the

forms of pills, powders and tea bags. In 1956, she began formulating an exfoliating mask and

various jamus for the wives of her husbands colleagues, using a makeshift productionfacility in her garage, and over time the purchase of a pill-making machine marked the

beginning of the companys expansion.

In 1987, the company was incorporated, and began with just 10 employees. Over the

years, production facilities were upgraded and allowed manufacturing with modern

equipment, meeting rigorous standards for quality and safety according to the 1997 annual

report. Advertising was used to create brand awareness and to increase demand for Mustika

Ratus products in major markets. In 1995, Mustika Ratu capitalized on their success and

went public, issuing 107,000,000 shares, priced at Rp. 2,600 in their IPO.

PROBLEM

1997 had marked the beginning of an enormous challenge for Indonesia as its

economy was one of the worst hit by Asian fnancial crisis. Virtually every company doing

business in Indonesia, and especially in Jakarta, had been adversely affected to some degree

by the social chaos. Mustika Ratu was no exception. Yogesh Dixit, managing dirctor of

Musika Ratu, was wondering whether the situation should lead Mustika Ratu to focus its

energy on its domestic market and to protect its existing position. In turn, the crisis could also

present opportunities. Perhaps now was the most opportune time for speeding international

expansion


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INTERNAL ASSESSMENT

a. Culture- Mustika Ratu is a leading Indonesian manufacturer of cosmetics and traditional

herbal supplements (S)

- Mustika Ratu is a beauty product that specially for Indonesian skin (S)b. Structure

- Mustika Ratu used each of these channels to market their extensive products lines(S)

- In mid-1996, Mustika Ratu established a direct selling division (S)- Mustika Ratu had opened 14 House of Mustika Ratu outlets in major urban

centres (S)

c. Resources Man

- Mustika Ratu had 4000 agents, 1.300 beauty advisers and 40.000 retail outlets(S)

Material- Product of Mustika Ratu has made by health and beauty properties of local

plants and herbs (S)

- Mustika Ratu had their own specialization plantations on Java (S)- Mustika Ratu has Halal standart (S)

Machine- Mustika Ratu used modern imported equipment (S)- Controlled through a recently installed information technology (IT) system (S)

Method- Mustika Ratu focus on domestic market and protect the existing position (S)- Quality control was a key part of the companys product strategy (S)- The promotion through a myriad of media and point of sale promotions (S)- Sponsorship of several major beauty events (S)- Concentrated on intensifying their departement store distribution channels (S)

Money- In 1998 the stock had declined dramatically (W)- Mustika Ratu has a top selling of the company revenue (S)


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EXTERNAL ASSESSMENT

1. PESTEL PoliticalLegal

-The political tensions running up to a parliamentary election June, along withthe issue of sovereignty in some regions of the country were expected to

manifest in continued social unrest (O)

Economics- The Asian financial crisis had devasted the Indonesian economy (W)- Foreign direct investment (FDI) had dried up and the domestic bankruptcy rate

increased dramatically (W)

- Close to half of Indonesias 200 banks were insolvent (W) Socialcultural

- Population of Indonesia is over 210 million and Indonesia is the fourth mostpopulus country in the world (O)

- Indonesia is a rich natural resources and agriculture (O)- The ranks of the unemployed swelled by thousands each day (W)- In urban center, these market held the potential of more 100 milion Muslim

consumer (O)

- In Malaysia, Mustika ratu in dou bling sales (O) Technological

- Using a mail order distribution channel in Hongkong and Holland (O)- The companys web site invited distributors meeting certain criteria to form

strategic alliance (O)

2. 5 PORTERS Threat Of New EntranceLow (O)

Mustika ratu is leading Indonesian manufacturer of cosmetics and traditional

herbal supplements. Product of Mustika Ratu has made by healt and beauty

properties of local plants and herbs and halal standard. And this is will be difficult

to new entrance to enter the market.

Bargaining Power Of BuyersLow (O)The buyers did not really have bargaining power when it came to spezialitation

product of cosmetic and traditional herbal of Mustika Ratu. The scale of Mustika

Ratu business reduces the bargaining power of any single group of buyers.


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Threat Of Subtitutes Products Or ServiceLow (O)The substitution of manufacturer of cosmetic and traditional herbal will be lower

chances for Mustika Ratu products.

Bargaining Power Of Suppliers

Low (O)

Not much bargaining power for product suppliers. The Mustika Ratu their own

specialization plantations on Java. So bargaining Power of Supplier is low.

Rivalry Amongst Competing FirmsLow (O)Product of Mustika Ratu have not much competitor in Indonesia. Their product is

spezialitation so a little competitor for Mustika Ratu.

CORPORATE STRATEGY AND BUSINESS STRATEGY

IFAS , EFAS AND QSPM

IFAS and EFAS before crisis for Mustika Ratu summary showed on Table 1 and Table 2

Table 1 IFAS Before Crisis for Mustika Ratu

IFAS Weight RatingWeighted

Score

STRENGTH

Mustika Ratu is a leading Indonesian manufacturer of cosmetics and traditional

herbal supplements0,200 4 0,8

Mustika Ratu is a beauty product that specially for Indonesian skin 0,030 3 0,09

Mustika Ratu used each of these channels to market their extensive productslines

0,040 3 0,12

In mid-1996, Mustika Ratu established a direct selling division 0,030 2 0,06

Mustika Ratu had opened 14 House of Mustika Ratu outlets in major urban

centres0,020 3 0,06

Mustika Ratu had 4.000 agents, 1.300 beauty advisers and 40.000 retail

outlets0,005 2 0,01

Product of Mustika Ratu has made by health and beauty properties of local

plants and herbs0,070 3 0,21

Mustika Ratu had their own specialization plantations on Java 0,070 3 0,21

Mustika Ratu has Halal standart 0,070 2 0,14

Mustika Ratu used modern imported equipment 0,060 3 0,18Controlled through a recently installed information technology (IT) system 0,010 2 0,02

Mustika Ratu focus on domestic market and protect the existing position 0,070 3 0,21

Quality control was a key part of the companys product strategy 0,040 3 0,12

The promotion through a myriad of media and point of sale promotions 0,060 4 0,24

Sponsorship of several major beauty events 0,070 3 0,21

Concentrated on intensifying their departement store distribution channels 0,060 3 0,18

Mustika Ratu has a top selling of the company revenue 0,035 3 0,105

TOTAL 1 2,965


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Table 2 EFAS Before Crisis for Mustika Ratu

EFAS Weight RatingWeighted

Score

OPPORTUNITY

Population of Indonesia is over 210 million and Indonesia is the

fourth most populus country in the world 0,22 3 0,66

Indonesia is a rich natural resources and agriculture 0,32 4 1,28

In urban center, these market held the potential of more 100

milion Muslim consumer0,16 3 0,48

In Malaysia, Mustika ratu in doubling sales 0,12 3 0,36

Using a mail order distribution channel in Hongkong and

Holland0,1 2 0,2

The companys web site invited distributors meeting certain

criteria to form strategic alliance0,08 2 0,16

TOTAL 1 3,14

From the result above (table 1 and 2), we can see that the IFAS method total score is

2.965 and the EFAS total score is 3.14. We can plot this result to the directional strategic

matrix. The result can see from picture 1.

Picture 1 Directional strategic matrix Before Crisis for Mustika ratu

From this result we can conclude that the Mustika Ratu is a growth company and the

company do horizontal growth because wide market until mid-east. When happened crisis

financial in Indonesia, corporate strategy and business strategy for Mustika Ratu changed to

keep the company survival. IFAS and EFAS for Mustika Ratu When Crisis Financial showed

on Table 3 and Table 4.


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For choose the best alternative option, we are using the QSPM (Quantitave Strategic

Planning Method) method that could see from table 5.

Table 5 QSPM For Mustika Ratu When Financial Crisis

RatingWeighted

Score

RatingWeighted

Score

RatingWeighted

ScoreSTRENGTH

Mustika Ratu is a leading Indonesian manufacturer of cosmetics and

traditional herbal supplements0,03 3 0,09 3 0,090 3 0,09

Mustika Ratu is a beauty product that specially for Indonesian skin 0,03 3 0,09 3 0,090 3 0,09

Product of Mustika Ratu has made by health and beauty properties of local

plants and herbs0,02 3 0,06 3 0,060 3 0,06

Mustika Ratu had their own specialization plantations on Java 0,03 3 0,09 3 0,090 3 0,09

Mustika Ratu has Halal standart 0,04 4 0,16 4 0,160 4 0,16

Mustika Ratu used modern imported equipment 0,04 3 0,12 3 0,120 3 0,12

Controlled through a recently installed information technology (IT) system 0,04 3 0,12 3 0,120 3 0,12

Mustika Ratu focus on domestic market and protect the existing position 0,04 3 0,12 3 0,120 3 0,12

Quality control was a key part of the companys product strategy 0,04 3 0,12 3 0,120 3 0,12

The promotion through a myriad of media and point of sale promotions 0,03 3 0,09 3 0,090 3 0,09

Concentrated on intensifying their departement store distribution channels 0,03 3 0,09 3 0,090 3 0,09

WEAKNESS

In 1998 the stock had declined dramatically 0,08 5 0,375 5 0,375 5 0,375

OPPORTUNITY

The political tensions running up to a parliamentary election June, along with

the issue of sovereignty in some regions of the country were expected to

manifest in continued social unrest

0,06 4 0,24 4 0,240 4 0,24

Population of Indonesia is over 210 million and Indonesia is the fourth most

populus country in the world0,05 3 0,15 3 0,150 3 0,15

Indonesia is a rich natural resources and agriculture 0,05 4 0,2 4 0,200 4 0,2

In urban center, these market held the potential of more 100 milion Muslim

consumer0,05 3 0,15 3 0,150 3 0,15

In Malaysia, Mustika ratu in doubling sales 0,05 3 0,15 3 0,150 3 0,15

The companys web site invited distributors meeting certain criteria to form

strategic alliance0,05 3 0,15 3 0,150 3 0,15

THREATS

The Asian financial crisis had devastated the Indonesian economy 0,08 4 0,32 4 0,320 5 0,4

Foreign direct investment (FDI) had dried up and the domestic bankruptcy

rate increased dramatically0,07 3 0,21 3 0,210 4 0,28

Close to half of Indonesias 200 banks were insolvent 0,05 3 0,15 3 0,150 4 0,2The ranks of the unemployed swelled by thousands each day 0,04 3 0,12 2 0,080 3 0,12

TOTAL 1,00 3,37 3,33 3,57

Option 1 (Pause) Option 2 (No Change)

Weight

Option 3 (Profit)

From the result from Table 5, we choose profit strategy with narrow product, especially

cosmetic and herbal supplement. This profit strategy catch asian market and focus on

Indonesian market.

FUNCTIONAL STRATEGY

Functional strategy that company should do to increasing sales from Indonesian Market

showed on Table 6 and functional strategy to increasing sales form Asian market showed on

Table 7.


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Table 6 TOWS Market for Indonesian Market

S1Mustika Ratu is a leading Indonesian manufacturer of

cosmetics and traditional herbal supplementsW1

In 1998 the stock had

declined dramatically

S2Mustika Ratu is a beauty product that specially for

Indonesian skin

S3Product of Mustika Ratu has made by health and beauty

properties of local plants and herbs

S4

Mustika Ratu had their own specialization plantations on

JavaS5 Mustika Ratu has Halal standart

S6 Mustika Ratu used modern imported equipment

S7Controlled through a recently installed information

technology (IT) system

S8Mustika Ratu focus on domestic market and p rotect the

existing position

S9Quality control was a key part of the companys

product strategy

S10The promotion through a myriad of media and point of

sale promotions

S11Concentrated on intensifying their departement store

distribution channelsOPPORTUNITY

O1

The political tensions running up to a parliamentary

election June, along with the issue of sovereignty in

some regions of the country were expected to

manifest in continued social unrest

1. Focus market for Low-Middle (S2;S3;O2) 1.

Increasing sales from domestic

market( middle-low) and moeslem

market (O2;O4;W1)

O2

Population of Indonesia is over 210 million and

Indonesia is the fourth most populus country in theworld

2. Strengthen brand name in marketing strategy (S1;S4;O1)

O3 Indonesia is a rich natural resources and agriculture 3. Continous improvement for quality product (S6;S9;O3)

O4In urban center, these market held the potential of

more 100 milion Moeslem consumer4.

Catch moeslem market for introduce the Halal product

(S5;S10;O4)

THREATS ST STRATEGIES WT STRATEGIES

T1 The Asian financial crisis had devastated the

Indonesian economy1. Push strategy (S7;S8;T1) 1.

Program training in recruitment

for get expert employee to

increase sales in Indonesian

T2

Foreign direct investment (FDI) had dried up and

the domestic bankruptcy rate increased

dramatically

2. Increasing relationship with distributor (S11;T3;T2)

T3Close to half of Indonesias 200 banks were

insolvent

T4The ranks of the unemployed swelled by thousands

each day

STRENGTH WEAKNESS

SO STRATEGIES WO STRATEGIES

INTERNAL FACTOR

EXTERNAL FACTOR

Table 7 TOWS Market for Asian Market

S1 Mustika Ratu is a leading Indonesian manufacturer ofcosmetics and traditional herbal supplements

W1 In 1998 the stock haddeclined dramatically

S2Product of Mustika Ratu has made by health and beauty

properties of local plants and herbs

S3 Mustika Ratu has Halal standart

S4 Mustika Ratu used modern imported equipment

S5Controlled through a recently installed information

technology (IT) system

S6Quality control was a key part of the companys

product strategy

S7The promotion through a myriad of media and point of

sale promotions

S8Concentrated on intensifying their departement store

distribution channelsOPPORTUNITY

O1 Indonesia is a rich natural resources and agriculture 1. Co ntin ou s imp ro ve me nt to qu alit y p ro du ct (S4; S6; O1) 1.

Wide market to A sian (middle-

low) and moes lem market by

strateg ic alliance (O3;W1)

O2 In Malaysia, Mustika ratu in doubling sales 2. Strengthen distribution channel (SS5;S8;O3)

O3The companys web site invited distributors

meeting certain criteria to form strategic alliance3.

Catch moeslem market for introduce th e Halal product,

esp ecially malaysia (S2;S3;O2)

THREATS ST STRATEGIES WT STRATEGIES

T1The Asian financial crisis had devastated the

Indonesian economy1. Increasing slaes from Asian Market (middle-Low) (S3;S7;T1) 1.

Program training in recruitment

for get expert employee to

increase sales in Asian market

(W1;T4)

T2

Foreign direct investment (FDI) had dried up and

the domestic bankruptcy rate increased

dramatically

2. Introduce product to asian market (S1;T2;T3)

T3Close to half of Indonesias 200 banks were

insolvent

T4The ranks of the unemployed swelled by thousands

each day

STRENGTH WEAKNESS

SO STRATEGIES WO STRATEGIES

INTERNAL FACTOR

EXTERNAL FACTOR

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