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Transcript of PT Mandom Indonesia
PT. MANDOM INDONESIA TBK.
BUSINESS STRATEGYMM 5012
Fikhi Adrian - 29112Perthyzsa Azaria – 29112026Molly Sitompul – 29112027
Lutfi Kausar Rahman – 29112041Yongke Yoswara – 29112250
MANAGEMENT BUSINESS OF ADMINISTRATIONSCHOOL OF BUSINESS AND MANAGEMENT
INSTITUT TEKNOLOGI BANDUNGFEBRUARI 2013
TABLE OF CONTENTS
TABLE OF CONTENTS....................................................................................................1CHAPTER I. INTRODUCTION.......................................................................................2
I.1. BACKGROUND..................................................................................................2
I.2. ABOUT COMPANY...........................................................................................2
I.3. EXTERNAL AND INTERNAL ANALYSIS......................................................3
I.3.1. INTERNAL ANALYSIS..................................................................................3
I.3.2. INDUSTRY COMPETITION ANALYSIS......................................................4
I.4. BUSINESS STRATEGY.....................................................................................5
CHAPTER II. BUSINESS MODEL ANALYSIS.............................................................7
II.1. COMPONENT OF BUSINESS MODEL............................................................7
II.1.1. CUSTOMER VALUE PROPOSITIONS......................................................7
II.1.2. PROFIT FORMULA.....................................................................................7
II.1.3. KEY RESOURCES.......................................................................................8
II.1.4. KEY PROCESSES........................................................................................9
II.2. VALUE CHAIN ANALYSIS..............................................................................9
II.3. ACTIVITIES MAP.............................................................................................11
II.4. BUSINES MODEL AND VALUE PROPOSITION ALIGNMENT................11
II.5. BUSINESS MODEL NEED ANALYSIS..........................................................12
CHAPTER III. CONCLUSION AND RECOMMENDATION...................................13
III.1. CONCLUSION..................................................................................................13
III.2. RECOMMENDATION......................................................................................13
III.3. LESSON LEARNED.........................................................................................13
REFERENCE....................................................................................................................14
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CHAPTER I. INTRODUCTION
I.1. BACKGROUND
Southeast Asia is a growing and diverse market for international personal care
product brands, despite the challenges (and some losses) caused by the recession. The
region contains relatively rich emerging markets (and the very rich city state of
Singapore), and its major poorer countries, notably Vietnam and Indonesia are growing
fast and emerging robustly from the recession.
Indonesia is home to approximately 700 cosmetic companies. In 2011 beauty and
personal care sales grew strongly in both volume and value terms, accelerating more than
in 2010. Rising disposable income due to strong economic growth in Indonesia facilitated
better purchasing power enabling consumers to buy beauty and personal care products.
The favourable performance was also supported by a flurry of new product launches,
aggressive promotional activity by players and rapid expansion of retailers. These factors
led to increased consumer knowledge of many products, and a consequent increase in
spending on different product types.
Beauty and personal care is still expected to perform respectably over the forecast
period. The potential for growth is still good, as the geographical penetration of many
products had yet to reach an optimum level in the review period, given the vast size of the
country. While urban dwellers will remain the main engines of growth, rural inhabitants
are expected to increasingly contribute to rising volume sales of basic necessities, such as
bath and shower, hair care and oral care. Improved distribution networks in rural areas and
manufacturers’ attempts to make their products more affordable to every income level will
give rural dwellers better access to beauty and personal care. At the same time, urbanites
are expected to trade-up to more value-added products, such as those considered masstige.
I.2. ABOUT COMPANY
PT. Mandom Indonesia Tbk. was established as a joint venture between Mandom
Corporation Japan and PT. The City Factory. The Company was incorporated bearing the
name PT. Tancho Indonesia and changed to PT. Mandom Indonesia Tbk. on 2001. On
1993, the company became the 167th company and the 11th Japanese joint venture
company listing its share on the Indonesia Stock Exchange.
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The company holds on to the vision of “Towards Asia Global Company Based in
Indonesia”. Their mission is to provide a comfortable lifestyle supported by health and
beauty. PT. Mandom Indonesia Tbk. has three values as their foundation: (1) Creating
lifestyle value with consumers, for consumers, (2) Active employee participation, (3)
Social responsibility and sustainability.
The company's commercial production was started on 1971 when the company
initially produced hair care products, which then developed by producing fragrances and
cosmetics. Currently, Mandom has collaborated with several international brands, such as
RoC from France and Hakugen from Japan, to promote and distribute their products in
Indonesian cosmetics market. Some of their products are Gatsby, Pixy, Pucelle, Spalding,
etc.
Besides domestic market, the company also exports its products to some countries
such as United Arab Emirates (UAE), Japan, India, Malaysia, Thailand, and others.
Through UAE, the company's products are re-exported to some countries in Africa,
Middle East, Eastern Europe, and others.
PT. Mandom Indonesia Tbk. has many awards from their product: Indonesia Best
Packaging Award, Top Brand Award (from Frontier Magazine and Marketing Magazine),
Top Brand for Teens, etc.
I.3. EXTERNAL AND INTERNAL ANALYSIS
I.3.1. INTERNAL ANALYSIS
Resources
There are two types of resources in PT. Mandom Indonesia Tbk.: tangible and
intangible resources. PT. Mandom Indonesia Tbk. has 2 factories in Sunter and Cibitung.
In Sunter, company produce all of their cosmetic products and in Cibitung, the factory is
established to produce packaging and as their logistic centers. They also have technology
in research and development center as their strong resources to compete with other
competitors. The organization in this company is structured well.
For intangible resources, PT. Mandom Indonesia Tbk.’s products are well known
in market so their brand image and reputation are one of many intangible resources for
company. The company has been established for 40 years so they have good enough
reputation and trustable products for several demographical age segmentation. Company
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also have about 4100 employees with their knowledge and skills as company’s intangible
resources.
Capabilities
In distribution areas, company can effectively use their logistic and management
technique. They build the factory for logistic center in Cibitung that is placed in the
middle of industry area. In manufacture, PT. Mandom Indonesia Tbk. design and produce
reliable products that can compete in the market. In research and development, they use
high technology to make innovation in their products.
Corporate Value
PT. Mandom Indonesia Tbk. has three values as their foundation:
(1) Creating lifestyle value with consumers, for consumers
The words “beauty”, “health”, “cleanliness”, and “fun” summarize our business. We will
do our best to listen to our consumers’ needs and wants and turn them into attractive
products and services, and to bring those “values” to as many consumers as possible
(2) Active employee participation
The corporate name “Mandom”, deriving from “Human” and “Freedom”, represents the
respect for human dignity and a liberal atmosphere. At the core of the Mandom Group is
an environment where employees can freely demonstrate their creativity through open and
lively discussions. The continuous growth of both the individuals and the entire
organization will enhance our value.
(3) Social responsibility and sustainability.
We will try to establish mutual communication with our stakeholders in order to build and
sustain favorable relationships with them. We aim to respond quickly to their demands on
our economic and social responsibilities. We will also be “a good corporate citizen” and
dedicate ourselves to society’s development.
I.3.2. INDUSTRY COMPETITION ANALYSIS
Rivalry among established competitions
The level of competition among the existing established competitors in personal care
product industry is high. The biggest competitors are Unilever, Kao, and P&G. The
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competitors have huge resources and strong power in personal care product industry. The
competitors also have strong brand awareness in consumer mind-sets.
Bargaining power of suppliers
Bargaining power of suppliers in personal care product industry is low because there are
so many options for the company to supply their needs of raw material. PT. Mandom
Indonesia Tbk. has their own factory for packaging of their products. For chemical raw
material, there are many supplier can supply.
Bargaining power of buyers
The bargaining power of buyers is high. Buyers have various options to choose the
personal care products. Buyers have strong ability to force down price for quality of the
products because buyers have so many brands to compare with.
Threat of substitute products or services
PT. Mandom Indonesia Tbk.’s products can be replaced with other competitor' products.
For example: Gatsby facial wash can be replaced with face wash bar-shaped soap, cleasing
milk, and body soap from other competitors. Pucelle cologne can be replaced with body
spray or aromatherapy products from other competitors.
Threat of the entry of new competitors
The level of threat of new entrants is high in this industry because there are so many
personal care product industry competitors. The competitors has strong brand awareness
in the customer mind-set and the competitors have so many experience in personal care
industry.
I.4. BUSINESS STRATEGY
Based on Porter, there are three generic business strategies for the company. The
first of three strategies is called overall cost leadership. A cost leadership strategy involves
a firm being the lowest-cost producer within the industry. The second strategy is
differentiation. A differentiation strategy is based on an organization producing products
or services which are perceived by customers as unique or different. A differentiated
product has the opportunity to meet different customer needs more closely. The third
generic strategy is referred to as a focus strategy. A focus strategy allows an organization
to target a segment or niche within the market. The segment may be based on a particular
customer group, geographical markets, or specific product lines.
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PT. Mandom Indonesia Tbk. is using cost leadership strategy. Their products are
also known as a budget or low price products. There is little difference in products’ feature
compared to other similar products that produced by competitors. In innovation, PT.
Mandom Indonesia Tbk.’s products are not pioneers. They release their products after
other products develop and release new products or feature. For example, PT. Mandom
Indonesia Tbk.release facial wash product lately, long time after other competitors launch
facial wash product. This situation can reduce their cost by reducing research cost.
Quality of their products is not quite high. Their products’ quality is average and
quiet similar even lower compared to other competitors in some products. Consumer
goods, in this case is cosmetics, don’t need high reliability product. These kinds of
products are high in turning ratio number. Their products are safe for people daily usage
and fulfill the health standard of Indonesia. This situation affects the cost of raw materials.
The raw material should be in lower quality in order to make the cost lower. These cost
strategies make the price can be lower compared to other competitor.
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CHAPTER II. BUSINESS MODEL ANALYSIS
II.1. COMPONENT OF BUSINESS MODEL
II.1.1. CUSTOMER VALUE PROPOSITIONS
Customer value proposition is a description of the experiences a target user will
realize upon purchase and use of a product. The customer value proposition is the most
important tool in PT Mandom Indonesia Tbk.’s to market their product. Company use
customer value proposition as a foundation for understanding how their product will
realistically be valued by their consumer.
The first value of PT. Mandom Indonesia Tbk. is “creating lifestyle value with
consumers, for consumers”. The company makes every products based on consumers’
research and they want to deliver the value to the customer using their products. It is
important for the company to be able to constantly provide the best for the consumer
without compromising the quality of the company’s products. The company always study
and observe consumer behavior in order to be able to provide product innovations which
are suitable and usefull for the customers.
II.1.2. PROFIT FORMULA
Revenue Model
The company net sales in 2011 consist of:
Hair care 615.695.034.761Skin care and make up 598.371.367.462Fragrance 424.221.854.573Others 16.382.841.562TOTAL 1.654.671.098.358
Domestic sales were Rp 1.22 trillion or grew by 11.1% compared to the previous
year. Meanwhile, export sales were recorded at Rp 437.72 billion or grew by 17.7%
compared to the previous year, with the support of the rapid growth of the Indian market
and the smooth export sales to Dubai as a pillar of the Company’s export business.
Accordingly, the ratio of domestic to export sales was 73.5%:26.5%.
Cost Structure
Commonly, all businesses have to create and keep their cost structure efficiently.
Otherwise, there’s business model that depends on efficient cost structure. According to
Alexander Osterwalder and Yves Pigneur, there’s two type of cost structure: cost-driven
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and value-driven. In a business model that use cost-driven, company focus on minimalize
cost to create the optimal cost-structure. But when company use value-drive cost structure,
cost efficiency is not a major consideration. The main tagert is company give premium
service to customer. PT. Mandom Indonesia Tbk. used cost-driven in their cost structure
because their business strategy is low cost so they minimize their cost (direct and indirect
cost).
Cost structure includes the key assets, direct cost, and indirect cost.
Key assets
PT. Mandom Indonesia Tbk. has total assets of IDR 844,694,007,386.00 key
consisting of land, buildings, machinery and equipment, furniture and fittings,
vehicles, and constraction in progress. Of total assets is key, Machinery and
equipment is an important asset to running of the business, because of machinery
and equipment have 59% of the total key assets owned, PT. Mandom Indonesia
Tbk. should be able to allocate invesment of IDR 844,694,007,386.00 in each year.
Direct cost
Direct cost itself is a cost that can be seen directly on a firm and direct bearing on
the main business road of a company. At PT. Mandom Indonesia Tbk. has that
consists of raw and packaging materials used, direct labor cost, amortization and
depreciation, and factory overhead costs. which has a total of IDR
1,078,059,017,282.00. PT. Mandom Indonesia Tbk. is a company that
manufactures of body care products, it is the biggest direct cost of raw and
packaging for 81.50% of the total direct cost incurred by company every year.
Indirect cost
Contrast to the direct costs, indirect costs are costs that can not be seen directly its
effect on a production but actually although not seen directly, the cost goes greatly
affect the company. Indirect costs at PT. Mandom Indonesia Tbk. divided into two,
the first selling expenses amounted to IDR 256,787,803,418.00 or 62% and that
both the general and administrative expenses amounted to IDR
151,473,210,966.00 or 37%. Total of these two factors, company has indirect costs
amounting to IDR 408,261,014,384.00 and it can be concluded that the biggest
factor affecting the amount of indirect costs at company is selling epenses.
In the good company, direct cost must bigger than indirect cost because direct cost is the
real cost that influence the production of the company. Based on their financial report, PT.
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Mandom Indonesia Tbk. can be concluded that the company is good company because
their direct cost (72.5%) is bigger than their indirect cost.
II.1.3. KEY RESOURCES
Key resources are the required asset of PT. Mandom Indonesia Tbk to offer and deliver
value proposition to the customer.
Human Resource
Continues improvement for their employee, the Company facilitates the employees
in competency development for both technical skills and soft skills. The employee
become their competitive advantages because of their capability at research and
soft skill.
Strong brand
Strong brand of PT. Mandom Indonesia Tbk, support by advertising with popular
artist. PT. Mandom Indonesia Tbk is a market leader for hairstyling product and
men’s fragrance. 70,5% of market share for hair styling and 16,5% of market share
for men’s fragrance.
Technology
Great Japan technology for make perfectly cosmetic to fulfill market need is their
key resource. They make modern factory at Jakarta to make the product and
Cibitung as their packaging factory. The Cibitung factory must become a
production hub for the whole of Asia. It must manufacture even higher quality and
lower cost products.
Channel
Distribution channel of PT. Mandom Indonesia Tbk spread widely all over
Indonesia, Thailand and India. In Indonesia, their product sales were at the big
mall until traditional market and small retailer. Because of their strong distribution
channel they can survive at strong competitive environment with P&G and
Unilever.
II.1.4. KEY PROCESSES
PT. Mandom Indonesia Tbk. has good process from R&D until the deliver their
product to the customer that allows them to deliver value to their customer. The whole
process from R&D to delivery their product to the customer is their key process. As the
starting point of their processes, the development of new product plays important role for
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the company. Therefore, according to one of the company’s values, namely “Creating
lifestyle value with consumers, for consumers”, the company conducts new product
development based on researches on consumers’ needs and analysis of market trends as
well as constructs detailed plans as a result of intensive discussions among the relevant
divisions.
The second process is production. The production department played an important
role as the basis of production for PT. Mandom Indonesia Tbk. The production process
paid special attention to the effort for the development of a competitive production
system, both from the aspect of quality and cost. After production process, next process is
packaging. The production of this packaging requires high technical ability due to its
different specifications with the packaging which have been produced so far by the
company, and the company has successfully met the requirements, so that shipping is
scheduled to commence in 2012.
The next key process which also is an important part is the delivery of their
products to their retailers. They must ensure that the delivery schedule. This is one of the
key processes so that they can of their product delivering value to the customer. From the
customer, it will be returned to the process R & D. The company will conduct research to
determine customer needs and the latest technological developments that could still focus
on the customer needs.
II.2. VALUE CHAIN ANALYSIS
Primary Activities
The production department played an important role as the basis of production for
PT. Mandom Indonesia Tbk. The production department also paid special attention to the
effort for the development of a competitive production system, both from the aspect of
quality and cost.
In marketing and sales, the activities were prioritized to support the focus brands
for men and women, namely GATSBY and PIXY. The company broadcasted TV
commercials. Along with the broadcast of TV commercial, the company has displayed
Points of Purchase (POP) in stores, such as hangers. PT Mandom Indonesia Tbk. has 2
kinds of sales: domestic and export. The ratio of domestic to export sales was 73.5% :
26.5%. Meanwhile, in order to improve service for customer, PT. Mandom Indonesia Tbk.
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strengthened the membership program, for example: PIXY Beauty Community (PBC).
Various events had been conducted for PBC members
In terms of purchasing activity, the company also encountered difficulties in
purchasing resin materials and supply of some raw materials. However, such problems can
be solved without significantly affecting the production process by implementing the
policy of early order and increasing the secure stock level, as well as the purchasing policy
from multiple suppliers.
Support Activities
The Company conducts new product development based on researches on
consumers’ needs and analysis of market trends as well as constructs detailed plans as a
result of intensive discussions among the relevant divisions.
In human resources, the company is fully committed to incessantly increase its
ability in recruiting, maintaining, and developing its employees. One of the Company’s
efforts in managing the employees’ competence is by implementing a Career
Development Program (CDP). Furthermore, the Company also facilitates the employees in
competency development for both technical skills and soft skills.
As part of the community, PT. Mandom Indonesia Tbk. is fully aware of the
importance of a community friendly business. Therefore, the company divides its focus on
social activities to environment and education. In the area of environment, the Company
continuously improves its awareness of waste water treatment both for production and
domestic waste. In the area of education, the company actively participates in facilitating
students of SMK in Jabodetabek area for a job training opportunity.
Starting 2011, the company enhanced the use of information technology (IT) to
strengthen information sharing activities with the consumers. Activities through Facebook
have been conducted by synchronizing among ASIAN countries which market products in
order to increase the number of customers.
II.3. ACTIVITIES MAP
PT. Mandom Indonesia Tbk. has positioned themselves as low cost manufacture,
globalization, and lifestyle product. For low cost manufacture position, the activity that
support their position are production in emerging country, efficient production system,
packaging production system, men and women product categorizing, and mass production.
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Their production is in emerging countries because of the low cost operational, especially
in labour cost. They also use modern technology to make their production more efficient.
They have their own factory for packaging so they can reduce their cost in purchasing for
packaging. They categorize their products based on women and men product so they can
focus on their product development. They can get low cost product with supported from
mass production and high volume of sales.
For globalization position, they have several factories at Asia (Japan, India, &
Indonesia). Their strategic position factories at Asia make them easier to deliver product
all around Asia. To compete in global market, the company develop some training to
improve their employees’ skill (soft skills and hard skills) and make them more
competents in order to meet challenges in global market.
They also positioned themselves as company with lifestyle product. To sustain at
this position they make their product with excellence design to meet costumer needs.
Company do some dynamic marketing to make their brand awareness as lifestyle
products. PT. Mandom Indonesia Tbk. did some research and development based on
customer’s needs.
II.4. BUSINES MODEL AND VALUE PROPOSITION ALIGNMENT
Cost - Price
Their position of price is leader. Cut the cost by producing the products’ packaging in
their own plant. Some raw material developed. They also have many suppliers can supply
their material. Based on our analysis these situations impact the cost which make the
company can reduce their operating cost.
Innovation - Features
Their position of features is basic. There are no any special features in their product. Their
innovations are incrementally changed. So the features of products are basic and little bit
customized in some variant.
Reliability - Quality
The quality of their products is average and acceptable. Consumer goods, in this case is
cosmetics, don’t need high reliability. These kinds of products are high in turning ratio
number. Their products are safe for people daily usage and fulfill the health standard of
Indonesia.
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Relationship – Support
The level of support is standard. This company has medium intensity of relationship to
their customers. There are informations that show company’s relationship to its customers
such as gathering, seminars, and other forms of activities that develop company –
customer relationship. But there is no customer’s hotline number for complaints and
information as other competitors have been developed.
Channels – Availability
The level of availability is spread. These products are widely available in Indonesia.
Products are available in supermarket, main retailer, small retailer, and sometimes in
traditional market. It is not difficult to find Mandom’s products in Indonesia.
Brand – Reputation
The level of reputation is well-known. Mandom’s products are well known as economical
products that fit to most of Indonesian customer’s needs. Their products are not difficult to
find and have been identical for most Indonesian consumers.
II.5. BUSINESS MODEL NEED ANALYSIS
Cost - Price
Value of products will be improved in line with the price. Improvements that can do to
increase the value of products is gaining their quality of products. The price will be
increased from price leader into competitive acceptance price range.
Innovation - Features
They should improve their packaging design in order to fit the current trend and lifestyle.
They can analyze the current trend from the customer and current lifestyle. PT. Mandom
Indonesia Tbk. also does some incremental innovation on composition of their products.
Reliability - Quality
In order to compete with many competitors, they have to increase the quality of their
products by modernize their production system. The production systems include machine,
equipment, and also supported technology. They should develop safe and healthy
products. For example: they change their compositions to be more natural.
Relationship – Support
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To maintain their relationship with the customer, the company has to develop hotline
customer service and show at the product package. The company enhanced the use of
information technology (especially internet) to strengthen information sharing about their
products to customers. For example they can develop forum discussion and social media
to increase product’s brand awareness.
Channels – Availability
They must keep their product availability in the market to fulfill customer’s needs and
demands. They gain their maintaining of product availability in local and international
market. Products are available in supermarket, main retailer, small retailer, and sometimes
in traditional market in every area of Indonesia and also another country.
Brand – Reputation
The company must focus on social activities to environment and education. In the area of
environment, the company continuously improves its awareness of waste water treatment
both for production and domestic waste in order to avoid any negative impact to the
environment. The company actively participates in facilitating students of SMK in
Jabodetabek area for a job training opportunit. The company also provides a training on
the subject of ethics of appearance and attitude, selling technique, and others, in order to
support the students to be ready in communicating with the consumer.
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CHAPTER III. CONCLUSION AND RECOMMENDATION
III.1. CONCLUSION
PT. Mandom Indonesia Tbk. was established as a joint venture between Mandom
Corporation Japan and PT. The City Factory. The vision of this company is “Towards
Asia Global Company Based in Indonesia”. Besides domestic market, the company also
exports its products to some countries. The company has many strong competitors, such as
Unilever and P&G.
PT. Mandom Indonesia Tbk. is using cost leadership strategy.
III.2. RECOMMENDATION
III.3. LESSON LEARNED
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Exhibit X Value Chain Analysis
Exhibit X Business Model and Value Proposition Alignment
Exhibit X Activity Map
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