Rodamas Group

Designing Strategies for Changing

Realities in Emerging Economies
Syndicate 6:
Aneira Syahadatil Arsya 29119416
Kresno Budi W 29119504
Qonita Usthufiya 29119410
Damarendro Hutomo 29119605
Company Profile More detailed analysis on
entering the property sector
explained on slide 25 onwards
Rodamas (means “golden wheel”) is an Indonesian
manufacture company that is active in several line
businesses.

Started in 1959 by Tan Siong Kie, a Chinese Indonesian,

in Jakarta, under the name Ho Hoa Trading Company
Limited. Currently led by Tan Siong Kie’s son, Mucki Tan.

Rodamas was established as a response of Indonesia’s

rising industrial development after its proclaimed
independence, which focused on import trade and
developed partnership with foreign manufacturers to
produce basic products, starting from roof material and
gourmet powder.
 “To keep up with modern time ,
Rodamas planned to changed from
conventional business model”

Business Problem
 Business Problem

Capabilities Saturated Market Rising competitors Diversification strategy

Rodamas does Rodamas line Market has been What strategy
not own any businesses have grown also suit with
proprietary natural limits of competitor on situation of
competencies growth the market Rodamas facing
share (ex: to secure its
Indofood) position in the
market?
 Alternative Strategies
Focus on customer
Entering the property Acquisition of
product distribution
sector manufacturing plant
business

Move into Internalization via

labor-intensive foreign direct
manufacturing investment
 Justification for Diversifying
Testing Whether The
Diversification Will Add The
Long-term Value For cost-of-entry
Shareholders test

SWOT
01 02 03 04 ANALYSIS

The industry The

attractiveness better-off
test test
 Porter
5-Forces
 More detailed analysis on entering the property
PORTER 5 FORCES sector explained on slide 25 onwards

Entering the property sector

High High High Medium Medium

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● Some of the players is ● Rodamas has ● many well-known ● Many players that non ● Low demand as
Rodamas and minimal experience in competitors profit tenants, lease there are many
multinational the property sector.
companies ● Public or private ● Whether or no
company such as PP ● No switching cost
● Owned few switching cost
● Need large of cost Property, agung as no
properties.
podomoro, etc. ● Others real estate
● Different taxes system techonology/syste
offers lower prices for
● Advantages based on the same quality. m introduced
locations

● Government
regulation
 More detailed analysis on entering the
ADVANTAGES DISADVANTAGES property sector explained on slide 25
onwards
Entering the property sector
Advantages Disadvantages

Rodamas can be a player in the property sector. Indonesia's tax system is different.

The strategic position of the property owned by the rodamas Tan's lack of experience in the property sector.
adds value to their business.

The company earns long-term income from rental property. Rodamas doesn’t have a fairly well-known brand name.

The level of competition in real estate in Indonesia is high.

Attractiveness: This industry is quite attractive because Rodamas have never get into property sector. However, due
to low experience and risks that received also many competitors in the property sector, this strategy is not the best
choice.

Cost of Entry: Based on the porter 5 forces, the cost of entry is moderate.

Better Off: Based on advantages and disadvantages, it has more disadvantages, the risk received is quite large.
PORTER 5 FORCES
Internationalization via foreign direct investment

Medium High Medium Low High

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● Limited knowledge ● Profitable partnership ● Few regional ● Because manufacture ● Partnering with Asahi
due to new product competitors is in Indonesia, the already has a
experiences costs will be less reputation in Indonesia

● Limited financial risk ● The product cost more ● High purchasing

due to partnership cheaper power of the product

● The brand is well

known as the largest
in Southeast Asia.
ADVANTAGES DISADVANTAGES
Internationalization via foreign direct investment
Advantages Disadvantages

Economic crises around the world provide opportunities. Lack of human resources from the company.

Expanded the role by establishing manufacturing in the Asian The decision depends on the partner
market.

Can be a partner in the success of the Asahi company's

regional concentration.

Provides huge potential in the future.

Attractiveness: Based on porter 5 forces, this strategy is very attractive because the risks received by Rodamas are
few due to cooperation with the Asahi company.

Cost of Entry: based on a 5 force porter, the cost of entry is High.

Better Off: Based on advantages and disadvantages, this strategy is more profitable because of the lack of big risks
that will occur, this choice will be the best strategy.
PORTER 5 FORCES
Focus on distribution business

High Low High High Moderate

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● Build a channel to ● The local market is ● A lot of distributor but ● High because ● The distribution area
expand distribution so saturated. Rodamas was competitors from coverage should be
involved in a number various sectors, such expanded to increase
that the incoming
purchasing power
costs are high and of sectors as food, building
profitability. materials, chemicals,
● The competitors were quite a lot
diverse and not
specific.
ADVANTAGES DISADVANTAGES
Focus on distribution business
Advantages Disadvantages

Already have experience in the distribution sector in urban and Low margin in Indonesia, it’s depends on the volume of
rural areas. demand. Low demand, low profit.

Few competitors on several products. Poor infrastructure and high fixed costs.

High level of corporate conflict.

Requires investment in time management.

Attractiveness: This industry is interesting because Rodamas have long been in the distribution business. The
experience gained is quite a lot. However, for now, conditions in Indonesia can pose a lot of risks to companies.
Indonesia's current conditions do not support this strategy.

Cost of Entry: Based on porter 5 forces, cost of entry is medium.

Better Off: Based on advantages and disadvantages, this strategy provides more risk and conflict to the
company than profits, and will incur considerable costs. Then this strategy is not the best choice.
PORTER 5 FORCES
Move into Labor Intensive Manufacturing

Medium Low High High High

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● High Economies of ● Industry do not ● multinationals ● Substitute are ● Multinationals

Scale pay high cost in could walk out available and spread their

● Low Capital changing supplier tomorrow better suppliers

Requirement ● Labor weakly performance ● Buyer switching

● Medium labor cost differentiated ● Low switching cost cost are low

● No brand ● Low switching cost

preferences ● Competitor big
 ADVANTAGES DISADVANTAGES
Move into Labor Intensive Manufacturing
Advantages
Broad connections can still be
useful
Labor intensive is more flexible in
terms of quantity
Capital Intensive for quick
economic development
Disadvantages
Attractiveness:
Vulnerable to inflation The industry is quite attractive as based on
and unstable condition porter 5 forces, advantages and
disadvantages. Even though the threat from 3
Labor cost increase as factors are high, the major advantage in this
scale increase
strategy is its flexibility. Indonesia is populated
country, thus, labor supply (high turn around)
will not be a problem.

Cost of Entry: Based on Porter 5 forces, Cost of entry is medium

Better off: Based on advantages and disadvantages, it has more advantage
PORTER 5 FORCES
Acquisition of manufacturing plant

Low Medium Medium Low Medium

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● New entrants ● Rodamas is in ● Rodamas would ● For rival, finding ● Find company

wont have good financial need more the right that have fair

enough condition, but efforts in finding business at the price and can

resources to lack of R&D the right right price is a bring value to

acquire new skills manufacturer challenge. the company is

plant which is not a challenges

overpriced
ADVANTAGES DISADVANTAGES
Acquisition of manufacturing plant
Advantages Disadvantages

Access to developed technology or existing licenses High capital requirement

Has proper capital, resource, and capabilities New entrants will duplicate the product

Effectivity of cost Overpriced manufacturer must be avoided

Conflict in corporate culture

Attractiveness: Rodamas already had experience in this sector and has a good brand images.

Cost of Entry: High capital requirement, overpriced manufacturer

Better Off: The company needs to find existing manufacturing business that is not overpriced. By acquisitioning
manufacturing plant it will improve R&D skills and by supervision of the management of Rodamas.
Based on 5 Alternatives, two
the best options are

Internationalization
via foreign direct
investment

Buy Existing
Manufacturing
Business
 Primary Activities:
Operations - Manufacturing system can be
transferred, shared and utilized so long that the
industry is the same

Support Activities:
Technology - Technology in one country can be
used as a support in a new location

Value Chain Relationship with Internationalization

via foreign direct investment
Primary Activities:
All resources and capabilities can be shared
among two business if they are related (similar
market, geographical, technology, and condition)

Support Activities:
All resources and capabilities can be shared
among two business if they are related (similar
market, geographical, technology, and condition)

E.g Technology - Technology can be transferred

from the advanced manufacturing company

Value Chain Relationship with Buy Existing

Manufacturing Business
 Swot Analysis
Internationalization via foreign direct investment

Strength Weaknesses Opportunity Threat

● Local market ● Increasing costs ■ Enter the new ● Increase in the
knowledge ● More Competitive market competition in the
● Market reputation market ■ Developed market
in trade market ● Decrease in new ● Bigger risk to enter
● Success for price market share technology a new market
strategy ■ Relocation for ● Current competition
● Profitable production ● Life cycle of
partnership ■ Responsible products
products business
SWOT Analysis
Buy Existing Manufacturing Business

Strength Weakness Opportunity Threat

■ Developed ➔ Innovation ➔ Good at ➔ Uncertain

technology or may falter taking market
havexisting overtime advantage of growth
license ➔ Clashes in opportunities ➔ Rise in the
■ Cost effective corporate ➔ Availability of cost and
and limited culture/philos finances daily
■ Strong ethical ophy products
values ➔ Poor
diversification
 Recomendation
Rodamas should...
● Internalization with foreign company based on the result analysis
best off strategy and Use existing good strong relationship to
expand business
 Thankyou!
More detailed analysis on entering the
property sector explained next slide
 Analysis
Entering the property sector
Rodamas main business is distribution, starting from chemicals, food products, consumer goods products, building
materials in meeting the basic needs of Indonesian society.

To develop Rodamas from traditional to modern business, requires several business change movements. One of
the business strategies on offer is enter the property sector business. Several reasons are relate if Rodamas
enters the property sector is the sales system used in the value chain will be related to the company's knowledge
in the property sector. However, it is unrelated because Rodamas have long experience in the distribution sector
business, it will be less suitable to enter the property sector. With a brand name that not strong, it will be difficult
for Rodamas to succeed in the property business, given the intense competition in it.

Entering the property sector will be very unfavorable for Rodamas due to the large number of risks that will be
experienced and Indonesia's unfavorable conditions.

the detail explanation will be explained in the slide below.

PORTER 5 FORCES Scope: property industry in
Entering the property sector Indonesia

High High High Medium Medium

Threat of New Bargaining Power Rivalry among Threat of Bargaining Power

Entrants of Supplier Competitor Substitute of Buyer

● Some of the players is ● Rodamas has ● many well-known ● Many substitutes are ● Low demand
Rodamas and minimal experience in competitors conventional (buy,
multinational the property sector. develop, sell) -> ● No switching cost
companies ● Public or private
perceived to be as no
● Owned few company such as PP
Property, agung economically wise by
● Need large of cost techonology/syste
properties. customer
podomoro, etc.
● Different taxes system m introduced
● No switching cost
● Advantages based on
● Population keep
locations ● Others real estate
offers lower prices for increasing
● Government
the same quality.
regulation
ADVANTAGES DISADVANTAGES Scope: property industry in
Entering the property sector Indonesia
Advantages Disadvantages

Rodamas can be a player in the property sector. Indonesia's tax system is different.

The strategic position of the property owned by the rodamas Tan's lack of experience in the property sector.
adds value to their business.

The company earns long-term income from rental property. Rodamas doesn’t have a fairly well-known brand name.

The level of competition in real estate in Indonesia is high.

Attractiveness: This industry is quite attractive because Rodamas have never get into property sector. However, due
to low experience and risks that received also many competitors in the property sector, this strategy is not the best
choice.

Cost of Entry: Based on the porter 5 forces, the cost of entry is moderate.

Better Off: Based on advantages and disadvantages, it has more disadvantages, the risk received is quite large.
Value Chain Relationship with Entering property sector
 Sales and Asset Asset
Initiation Compliances
development development Management
● Rodamas ● The entering ● The industry ● Rodamas can Rodamas group
entering property property sector operates is expand into other designing strategies
business sector strategy highly markets through in property sector can
to develop unacceptable fragmented its previous generate considerable
modern business because it ● Rodamas will experience, as well sustainable
strategy posses a high experience as through competitive
● While the threat risk in terms of slowing growth partnerships and advantage utilizing
of new entrant is investment in during this contracts with these systems. This is
high, Rodamas strategic stage of the other agents and done through means
should maintain marketing industry life parties. of traditional as well
their price or ● Rodamas will cycle ● Contract with as modern
increase funding need ● Competing offshore agents procedures to
and investment investment and players also and licenses, to embraced to
broaden portfolio
to discourage funds for exit the industry competitive
by adding new
new competition launching because of the advantages hand and
products based on
strategic changes and increases its share of
market research
campaign low demand and data. the pie
Value Chain Relationship with Entering property sector

Rodamas Property Sector Internal Value chain

Swot Analysis (from value chain and porter 5 forces)
Entering the property sector

Strength Weaknesses Opportunity Threat

● Has a lot of ● Rodamas has a ● Population increase ● High rivalry among
capital strong brand means there will be competitor
● Can be a long image but not market
term investment well-known ● Many well-known
to the company company in the ● Many young families competitor
property sector in the future means
they will first prefer ● No switching cost
● Hard to get trust and limited demand
from customer rent compared to buy
(because the (align with Tan’s plan ● Tax Structure not
company is not to rent the location) favourable
experiencing)
 Conclusion

● Based on the analysis, that the strategy for entering the property
sector is Not Fit for Rodamas, as seen from the company's
situation that is not possible based the lack of experience from the
company.
● The possibility of risk occurring is quite high, it can be seen from
the disadvantage, weakness and threat of Rodamas company.
● So it can be concluded that the best choice for Rodamas in
entering the property sector strategy is No Go.