Strategic management hm sampoerna
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Transcript of Strategic management hm sampoerna
© 2015 International ICT Business
STRATEGIC MANAGEMENT
Compiled by:Agung Andara
Rafa NajiyaAkyes DapilcaKenang Kana
Zul Asmi Retno
Lecturer by:Dr. Ir. Yudi Pramudiana, MM., MT.Risris rismayani, SMB., SPd, MM.
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STRATEGIC MANAGEMENT FRAMEWORK
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“What do company want to
become?”
Strategies are the means by which long-term objectives will be achieved.
“What is company business
?”
Result = Strengths and weaknesses
•Are an organization’s controllable activities that are performed especially well or poorly.
•Strengths and weaknesses are determined relative to competitors
• Strengths and weaknesses may be determined relative to a firm’s own objectives.
Result = Opportunities and Threads
•Economic•Social•cultural•Demographic•Environmental•Political•Legal•Governmental•Technological• Competitive trends and events that could significantly benefit or
harm an organization in the future
As specific results that an organization seeks to achieve in pursuing its basic mission.
“Long-term” means more than one year.
They state:• direction•aid in evaluation•create synergy•reveal priorities•focus coordination•provide a basis for effective planning, organizing, motivating, and controlling activities.
Objectives should be:•Challenging•Measurable•Consistent•Reasonable•clear. In a multidimensional firm, objectives should be established for the overall company and for each division.
Successful strategy implementation
requires the support of, as well as
discipline and hard work from, motivated
managers and employees.
Successful strategy implementation depends on cooperation among all
functional anddivisional managers in an organization.
Effective strategy evaluation allows an organization to:
•capitalize on internal strengths as they develop•exploit external opportunities as they emerge•recognize and defend against threats•mitigate internal weaknesses before they become detrimental.
Business strategies may include :•geographic expansion•Diversification•Acquisition•product development•market penetration•Retrenchment•Divestiture•Liquidation•joint ventures.
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Although not a guarantee for success, strategic management allows organizations to make :
effective long-term decisions execute those decisions efficiently take corrective actions as needed to ensure
success.
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COMPANY PROFILE
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PT Hanjaya Mandala Sampoerna Tbk. ("Sampoerna") is one of the leading cigarette manufacturer in Indonesia.
produce a number of brands of cigarettes are known, such as Sampoerna Kretek, A Mild, as well as the "King of Kretek" legendary Dji Sam Soe.
An affiliate of PT Philip Morris Indonesia and part of Philip Morris International, the leading cigarette manufacturer in the world.
Brief Information
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1913Liem Seeng Tee, a Chinese immigrant, began making and selling hand-rolled cigarette in his home in Surabaya, Indonesia. His small business was one of the first companies to produce and market cigarettes and white cigarettes.
History
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1930 Liem Seeng Tee later changed the family name
and the name of his company to Sampoerna, which means "perfection".
After developing his business, he moved both his family and his factory to an abandoned complex of buildings in Surabaya later renovated and named Taman Sampoerna.
History (cont.)
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1959Sampoerna Leadership switch to the second generation under the leadership of Aga Sampoerna, which focuses on the production of Clove Cigarettes Hand (SKT) premium.
History (cont.)
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1978The third generation family Sampoerna, Putera Sampoerna, took over the company, and accelerated the growth of Sampoerna.
History (cont.)
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1989Sampoerna launched brand A mild in Indonesia1990
Sampoerna into a public limited company with modern corporate structure and initiate a period of investment and expansion.
Sampoerna managed to strengthen its position as one of the leading companies in Indonesia.
History (cont.)
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2005Sampoerna's success attracted the attention of Philip Morris International Inc. (PMI), one of the leading tobacco company in the world. Finally, in May 2005, PT Philip Morris Indonesia, an affiliate of PMI, acquiring majority ownership of Sampoerna.
History (cont.)
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2008Sampoerna inaugurated cigarette clove machines (SKM) in Karawang, West Java, with an investment of USD 250 million.
2013Sampoerna commemorate the 100th anniversary of the founding of the company
History (cont.)
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At the end of 2013, the number of employees of Sampoerna and its subsidiaries have reached about 33,500 people. In addition, the Company is also working with 38 units Cigarette Production Partners (MPS), which are in various locations on the island of Java in producing Clove Cigarettes Hand, and overall has more than 56,500 employees.
Employee
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Product
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Sampoerna A Mild launched in 1989 and is a pioneer of tobacco products LTLN category (low tar low nicotine) in Indonesia. In 2013, A Mild retaining the position as a cigarette brand with the largest market share in Indonesia.
Product (cont.)
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Dji Sam Soe variants include segments SKT and SKM. Dji Sam Soe Filter, Dji Sam Soe Magnum Filter, and Dji Sam Soe Magnum Blue which was launched in early 2014, is part of SKM segment. While Dji Sam Soe Kretek and Dji Sam Soe Super Premium is part of SKT segment.
Product (cont.)
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Sampoerna Kretek is hand-rolled cigarettes were first produced in 1968 in Denpasar, Bali, by Aga Sampoerna, the second generation of the Sampoerna family. By combining quality tobacco and cloves, Sampoerna Kretek successfully be hand-rolled cigarettes best-in-class.
Product (cont.)
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U Mild launched in 2005 as part of a portfolio of products LTLN with Sampoerna A Mild . U Mild sales keep increasing since the launch, reaching 35.6% in 2013.
Product (cont.)
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Marlboro was launched in Indonesia in 1984 by PMID and is one of the largest international brands in the market. Sampoerna distribute Marlboro in Indonesia. Currently there are five variants comprising Marlboro Marlboro Red, Marlboro Lights, Marlboro Black Menthol, Menthol and Marlboro Lights and Marlboro Ice Blast.
Product (cont.)
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THE BUSINESS VISSION AND
MISSION
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Vision characterised
Adult smokers
Three Hands Philosophy
Employees and Business
partners
Society
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Sampoerna address it through…
Delivering high quality products in their preferred price category
Provide competitive compensation and good working condition for employees
Giving back to society
Building relationship with business partners
Continually seeking out in period of time what adult smoker wants and match their expectations
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Good Company’s vision
•SpecificS•MeasurableM•Achievable A•Realistic R•Timed T
Sampoerna explained what their goals, and what need to be done. Through deliver the high quality products, and build the relationship with partners and society
The measurement is when the goals are already achieved. So far, Sampoerna already obtained their goals and objectives
The visions of Sampoerna are able to accept. It proofed with what already done by those responsible for achieving it
The visions of Sampoerna are possible to attain. It reflects by what Sampoerna done until now
Sampoerna clearly stated that they continually seeking out in period of time to their customer needs and tried to match their expectations
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Mission Outline
1. Providing high quality products to adult smokers in the price category of brand choice
2. Provide competitive compensation and a good working environment for employees and foster good relationships with business partners
3. Giving contribution to the wide community
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MISSION ANALYSIS ASPECTS
Aspects in our analysis that match with company mission statement’s: 1. Costumers2. Product or Services3. Philosophy4. Self Concept5. Concern : Public Image 6. Concern : Employees
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1. Costumers Sampoerna mission is to provide a high
quality products to adult smokers in the price category of brand choice.
In facts Sampoerna consumers are not limited to adults only, but also a favorite choice for teenagers in Indonesia especially in their Mild Variants.
It still meets the criteria of the missions.
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Products or Services
Firm major products and services are :
1) Sampoerna AIncluding Sampoerna Clove Machine variants such as A Mild
2) Dji Sam Soe SampoernaThe first Handmade Clove Cigarette produce by HM Sampoerna.
3. Sampoerna Clove(Handmade Clove Cigarette produce in Denpasar, 1968)
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Products or Services
4. U MildRelease in 2005 as a portfolio products along with A Mild release.
5. Marlboro• Made by Phillip Morris International and
distribute in Indonesia by HM Sampoerna.
• Consist of 5 variant such as : Marlboro Red, Marlboro Lights, Marlboro Lights Menthol, and Marlboro Ice blast
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Philosophy The basic beliefs, values, aspirations, and
ethical become priorities of the firms. As mentioned in their mission statement
that they also focus on the activities of economic empowerment, education, environmental protection, and disaster management.
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Self Concept
The firm commit their major competitive advantage as mentioned in their mission statement. Such as :1. Provide high quality products2. Price category of brand choice3. Competitive compensation 4. Good working environment for their
employees5. Maintains good relationship with business
partners6. Contribution to the wide community
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Concern : Public Image The firm is highly response to the social,
community, and environments. As their mission to give a contribution to the wider community.
By giving a contribution to the community, they also build their public image.
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Concern : Employees Employees become a valuable asset in the
HM Sampoerna. Compensation, work environment and good
opportunities for career development and self-esteem is a key element in building employee motivation and productivity in the firm as mentioned in the mission statements.
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EXTERNAL ASSESSMENT
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5 FORCES ANALYSIS
Highly unattractive =1 Mildly unattractive =2 Neutral =3 Mildly attractive =4 Highly attractive =5
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Current Future
Number of quality balance competitor
2 2
Product features
3 3
Capacity increase
3 4
Diversity of competitors
3 3
Overall 2,75 3
Rivalry among competitor
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Current Future
Economic of scale 5 4
Product differentiation
3 3
Brand identification 4 4
Switching Cost 3 3
Access to distribution channels
3 3
Capital Requirement 1 1
Access to technology
3 3
Government protection
3 3
Experience effect 4 4
Overall 3.22 3.44
Barriers to entry
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Current Future
Assets specialization
3 3
Cost to exit 1 1
Government and social restriction
2 3
Overall 2 2.33
Barriers to exit
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Current Future
Number important buyers
4 4
Buyers switching cost
2 3
Buyers threat of backward integration
2 2
Industry threat of forward integration
2 2
Contribution to quality or service of buyer’s product
4 4
Buyer’s profitability 4 4
Overall 3 3.17
Power of buyers
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Number of important suppliers
2 2
Availability of substitutes for supplier product
2 2
Differentiation or switching cost of supplier’s product
3 3
Suppliers of contribution to quality or service of the industry product
4 4
Important of the industry to suppliers profit
4 4
Overall 3 3
Power of suppliers
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Current Future
Availability of close substitutes
3 3
User’s switching cost
2 3
Substitute producer’s profitability & aggresiveness
3 3
Substitutes price/ value
2 2
Overall 2 2.75
Availability of substitutes
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Current future
Barriers to entry
3.11 3
Barriers to exit 2.33 2.67
Rivalry among competitors
2.75 3
Power of buyers 2.5 2.67
Power of suppliers
3.6 3.6
Availability of substitutes
3.75 4
Overall assesment
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Current Future
Overall industry assesment
3 3.16
Overall industry assesment
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Industry Analysis: The External Factor Evaluation (EFE) Matrix
CompetitivePoliticalCultural
Technological
EnvironmentalSocial
Governmental
DemographicEconomic
Summarize & Evaluate
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WEIGHT indicates the relative
importance of that factor to being successful in the firm’s industry.
ranges from 0.0 (not important) to 1.0 (very important).
The sum of all weights assigned to the factors must equal 1.0
RATING indicate how
effectively the firm’s current strategies respond to the factor.
4 = the response is superior
3 = the response is above average
2 = the response is average
1 = the response is poor.
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EFE – HM Sampoerna tbk.
Key External Factors Weight RatingWtd
Score
Opportunities1. Plan affirmation of "RUU Pertembakauan"
0.10 2 0.20
2. Indonesian smokers are the second highest in the world
0.20 4 0.80
3. Demand for cigarette increasing (8%) anually
0.15 3 0.45
4. Exporting of cigarette growing (7,4%- 10%) anually
0.10 3 0.30
5. Indonesia is growing 1.49% anually in population
0.10 3 0.30
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Opportunities (cont’d)
7. Variant invention 0.13 4 0.52
8. Smoking has became a new urban lifestyle
0.12 30.36
9. Inovation Of LTLN In Cigarette Product
0.10 4 0.40
Total 1.00 3.33
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Threats 1. Increase in cigarette’s tax rate of 8.72% on average
0.20 3 0.60
2. Trend towards healthy life 0.20 4 0.80
3. Increase in cigarette industry total production of 5.55%
0.10 2 0.20
4. Government Regulation Of Tobacco Advertising Restrictions
0.10 2 0.20
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Threats (cont’d)
5. Increasing on tobaco price of 25% 0.20 3 0.60
6. Demand for electric cigarette growing recently
0.05 1 0.05
7. Probability Indonesia join FCTC 0.10 1 0.10
8. MUI statement of cigarette prohibition 0.05 1 0.05
Total 1.00 2.60
HIGHEST POSSIBLE Total weighted score is 4.0
Organization response is outstanding to threats and weaknesses
Industry Analysis EFE
LOWEST POSSIBLE Total weighted score is 1.0
• Firm’s strategies not capitalizing on opportunities or avoiding threats
AVERAGE Total weighted score is 2.5
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opportunityTotal weighted score of 3.33
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. is doing
excellent, taking advantage of the existing opportunities in its industry.
threats Total weighted score of 2.60
• Is above the average (midpoint) of 2.5• Indicates that HM Sampoerna tbk. is pretty
well in minimizing the potential adverse effect of external threats
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Industry Analysis: Competitive Profile Matrix (CPM)
Identifies firm’s major competitors and their strengths & weaknesses in relation to a sample firm’s strategic positions4 = major strength
3 = minor strength2 = major weakness1 = major weakness
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Sampoerna Gudang Garam
CSF’s Wt Rating Wt’d Score
Rating Wt’d Score
Market share 0.25 4 1 3 0.75
Fin position 0.15 4 0.60 2 0.30
Prod. Variant 0.10 3 0.30 4 0.40
Cons. Loyalty 0.10 4 0.40 3 0.30
Sales Distr 0.15 3 0.45 3 0.45
Global Exp. 0.15 4 0.60 3 0.45
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SampoernaGudang Garam
CSF’s (cont’d) Wt Rating Wt’d Score
Rating Wt’d Score
Price competitive 0.05 2 0.10 4 0.20
Mgt. experience 0.05 3 0.15 4 0.20
Total 1.00 3.60 3.05
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INTERNAL ASSESSMENT
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Refers to the process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing product(s) to marketing those products.
Value Chain Analysis (VCA)
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Primary activities – Logistic
HM SAMPOERNA GUDANG GARAM
Raw materials are mostly sourced domestically The raw materials, notably tobacco leaf and cloves
Invested in logistic infrastructure to enhance our inventory control system in our warehouses.
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Primary activities - Operation
HM SAMPOERNA GUDANG GARAM
•Supporting the business entirely by providing high quality products to the adult smokers in Indonesia •Delivering quality and innovation as well as high corporate quality standard
•Serving both the fast growing light and mild segment and the full flavour segment, providing both the choice and the quality associated with Gudang Garam’s name
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Primary activities – Marketing and Sales
HM SAMPOERNA GUDANG GARAM
Sampoerna sells and distributes cigarettes through a total of 105 sales offices located on the islands of Sumatra, Java, Bali,Kalimantan, as well as Eastern Indonesia
Produced sound revenue and earnings, and has embarked on a significant investment drive to sustain the prospects
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Support activities – Human Resource
HM SAMPOERNA GUDANG GARAM
Providing competitive compensation and good working conditions for employees and building good relationship with business partners
Employee welfare remains a priority both at all operational premises and through the provision of social and sports facilities, health and safety routines.
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Support activities -Procurement
HM SAMPOERNA GUDANG GARAM
•Sampoerna operates 9 manufacturing facilities in Indonesia•Sampoerna has partnership with 38 third-party operators
Foreign exchange exposure does arise from time to time in periodical purchases of machinery/equipment from overseas suppliers and, to lesser degree, from the routine procurement of imported raw materials such as filter material, flavours, and spare parts
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Support activities – Firm infrastructure
HM SAMPOERNA GUDANG GARAM
Sampoerna commit to running the company’s program for serving the all stakeholders through develop, and maintain the standard and integrity of the company.
As part of our overall branding strategy, we refreshed the pack design of our leading SKM (machine made) and SKT (hand made) products
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IFE – HM Sampoerna tbk. (2013)
Key Internal Factors Weight RatingWtd
Score
Strengths 1. Increasing in ROE 33% from 1750
to 2269 IDR0.10 4 0.40
2. Best company in term to satisfy the customers (2013award)
0.20 4 0.80
3. HMS is the market leader in Tobacco Industry
0.15 4 0.60
4. Increasing in total revenue by 12.6% 0.10 3 0.30
5. HMS has lot of variant product 0.10 3 0.30
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Strengths (cont’d)
7. HMS has loyal customers 0.10 4 0.40
8. HMS achieve 2013 Top Brand Award 0.15 4 0.60
9. Increased in customer 8,6% 0.10 3 0.30
Total 1.00 3.70
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Weaknesses 1. Decreasing in sales volume of SKT
13%0.10 2 0.20
2. Work termination of 2700 labors in 2 main factories
0.30 4 1.20
3. Unaffordable price caused by promotion and material cost
0.25 4 1.00
4. Slow growth on certain product 0.10 3 0.30
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Weaknesses (cont’d)5. Haven’t had the ability to compete in a Global Market
0.10 2 0.20
6. Inappropriate in capital allocation 0.15 4 0.60
Total 1.00 3.50
HIGHEST POSSIBLE Total weighted score is 4.0
Organization response is outstanding to threats and weaknesses
Industry Analysis IFE
LOWEST POSSIBLE Total weighted score is 1.0
• Firm’s strategies not capitalizing on opportunities or avoiding threats
AVERAGE Total weighted score is 2.5
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strengthsTotal weighted score of 3.70
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. is doing
excellent optimizing their ability and resulting giving a power for them to stand as a market leader in its industry.
weaknessesTotal weighted score of 3.50
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. Is doing
excellent managing their weaknesses so it won’t threaten their position in the market.
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LONGTERM OBJECTIVE
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Longterm Objective of HM Sampoerna To offer the best smoking experince to adult
smokers in Indonesia Continually seeking out what adult smokers
prefer and delivering the best products to match their expectations
Create a reputation for quality innovation as well as high corporate governance standard
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Definition and concept of strategies Definition: Strategy is organization’s
pattern of response to its environment over a period of time to achieve its goals and mission
Concept:The concept of strategy has been borrowed from the military and adapted for use in business
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Implemented Strategies Implemented Integrated Marketing
Communication (IMC) especially in building A Mild brand (late 1980) Sales
Division has a good digital mapping technology which able the company to be more accurately do the brand building in with their traditional retailer
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Vertical Integration
Backward
Philip Morris International Inc.
Forward
PT ASIA TEMBAKAU PT HARAPAN MAJU SENTOSA PT PERSADA MAKMUR
INDONESIA PT UNION SAMPOERNA DINAMIKA PT AGASAM PT GOLF TAMAN DAYU PT HANDAL LOGISTIK
NUSANTARA PT PERUSAHAAN DAGANG
DAN INDUSTRI PANAMAS PT SAMPOERNA PRINTPACK PT TAMAN DAYU PT WAHANA SAMPOERNA
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Intensive strategies
Market Penetration Market Development
Product Development
•Advertising expenditure•Publicity effort
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Diversification : Related
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Defensive
liquidation Retrenchment
In May, 2005, Philip Morris International, at that time a subsidiary of the Altria Group, completed the acquisition of 97.95% of the company. Sampoerna reported 2006 net sales of 29.55 trillion rupiah (approximately $3.22bn using the February 22, 2008 exchange rate) resulting in 3.53 trillion rupiah net income.
PT HM Sampoerna cut off 2.700 it’s workers in 2 of it’s handmade cigarette clove (SKT) factories in East Java (Lumajang and Jember) because the costumer preference of that product was change which lead SKT market to constantly decreased since 2012 until 2013.
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Porter’s Five Generic Strategies Focus – Best Value
HM Sampoerna is a little bit expensive rather than other cigarette’s product. Because, they offer best quality of tobacco
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STRATEGIES
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SWOT MATRI
X Opportunities:1.Plan affirmation of "RUU Pertembakauan"2. Indonesian smokers are the second highest in the world3. Demand for cigarette increasing (8%) anually4. Exporting of cigarette growing (7,4%-10%) anually 5. Indonesia is growing 1.49% anually in population6.Variant invention 7. Smoking has became a new urban lifestyle8. Inovation Of LTLN In Cigarette ProductThreats:1.Increase in cigarette’s tax rate of 8.72% on average2. Trend towards healthy life3. Increase in cigarette industry total production of 5.55%4. Government Regulation Of Tobacco Advertising Restrictions5. Increasing on tobaco price of 25%6. Demand for electric cigarette growing recently 7. Probability Indonesia join FCTC8. MUI statement of cigarette prohibition
Strengths:1. Increasing in ROE 33% from 1750 to 2269 IDR2. Best company in term to satisfy the customers (2013award)3. HMS is the market leader in Tobacco Industry4. Increasing in total revenue by 12.6%5. HMS has lot of variant product 6. HMS has loyal customers7. HMS achieve 2013 Top Brand Award8. Increased in customer 8,6%
Weaknesses:1.Decreasing in sales volume of SKT 13%2. Work termination of 2700 labors in 2 main factories3. Unaffordable price caused by promotion and material cost4. Slow growth on certain product (Avolution)5. Haven’t had the ability to compete in a Global Market6. Inappropriate in capital allocation
1. New products innovation for global target market
2. Looking for investor3. Increasing the promotion to gain
brand awareness and expand the business
4. Maintaining the market power of HM Sampoerna popular product(mild)
1. Making the strategies to promote the certain product (Avolution) in the global market
2. Making new variant inventions3. Promotion through sponsoring
the big events to gain brand awareness of the customer
1. Decrease the producing of the certain products
2. Making the CSR strategy to deal and anticipate the MUI statement and government regulation
3. Brand image of a certain products
4. Taking the advantage from the annually events to promote the products
1. Joining to the anti-cigarette campaign to gain brand awareness
2. Controlling the market through decreasing prices of the certain product
3. Conduct the research to find the cheaper raw materials
4. Promoting the Brand image “The Finest Quality” to the customer
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FINANCIAL POSITION (FP) Ratings
HMS current ratio is higher 79% compared to GG 5.0
HMS give ROE (76.4%) significantly higher than GG (14.9%)
5.0
HMS has 5385 billion less than GG in net working capital 4.0
Earning per share for HMS (Rp 2468) is higher than GG (Rp 2250)
4.0
18.0
Internal Strategic Position
COMPETITIVE POSITION (CP) Ratings
HMS got highest percentage of market share in cigarettes industry with 36.1%
-1.0
HMS can satisfy their customer needs; proven by award -2.0
-3.0
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External Strategic PositionSTABILITY POSITION (SP) Ratings
The exchange rate for rupiah has weakened -5.0
The new regulation for tax of 10% of excise duty has made the industry not stable
-4.0
The price range for cigarette products within industry is not significantly different, but still have influence on sales of products
-2.0
Barriers to exit from cigarette industry is really costly -5.0
-16.0
INDUSTRY POSITION (IP) Ratings
-5.0
-4.0
-2.0
-5.0
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SP Average is -16.0÷4 = -4.0 IP Average is – FP Average is 18.0÷4 = -4.5 CP Average is -3.0÷2 = -1.5
Directional Vector Coordinate :X-axis -1.5+(ip)Y-axis -4.0 -4.5=
conclusion
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The Internal and External (IE) Matrix
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BUSINESS MODEL FRAMEWORK
Key resources
Customer segment
Cost structure
Revenue stream
Distribution channel
Customer relationship
Value proposition
Key partnership
Key activities
INFRASTRUCTURE
CUSTOMEROFFER
FINANCE
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MAN MONEY :profit, shareholder
investment MATERIAL :tobacco leaf & clove MACHINE :SKM INFORMATION
KEY RESOURCES
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KEY PARTNERSHIP
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Value Preposition
1. Providing high quality products to adult smokers in the price category of brand choice
2. Provide competitive compensation and a good working environment for employees and foster good relationships with business partners
3. Giving contribution to the wide community
Three Hands Philosophy
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Sampoerna has a good relationship among it’s costumer. Sampoerna are fully committed to producing high quality with reasonable price for adult consumers. By committed to keep the costumer satisfaction level higher, indirectly Sampoerna also maintain it’s relationship with them. Sampoerna can reach their good performance in costumer relationship. This is achieved through offering relevant products and innovations to meet the costumer changing preferences.
CUSTOMER RELATIONSHIP
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PT Panamas as the sole distributor of PT HM Sampoerna’s product.
DISTRIBUTION CHANNEL
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CUSTOMER SEGMENT
Adult smokers
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EXTERNAL-CUSTOMER PREFFERENCE-SKM INTENSIVE-
INTERNAL-LOT OF VARIANT-ACQUISITION BY PHILIP MORRIS
INTERNATIONAL-PIONEER OF LTLN CIGARETTE
COMPETITIVE ADVANTAGE
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STRATEGIC MANAGEMENT
Agung AndaraRafa Najiya
Akyes DapilcaKenang Kana
Zul Asmi Retno
Chapter 8 Marketing, Finance/Accounting,
R&D, and MIS Issues
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HM SampoernaMARKETING
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Market Segmentation
A-mild, more toward that effort Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, pekerjaann, education, religion, race and nationality.
Sampoerna A-mild, divide society into segments of educated people who will truly understand the dangers of smoking but still choose to smoke. In the segment of educated people, there is a potential consumer for cigarette manufacturers, namely well-educated young people who know the effects of smoking, but to take the risk for smoking.Later can become long term customers for the company, because smoking can cause entanglement. If the young consumers are bound, then the company will have the potential to be loyal consumers in the long run.
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For the PT HM Sampoerna Tbk will continue to try to penetrate the premium for tobacco products. Such as by launching a new product named Avolution.Avolution been thrown into the market to enliven the market in Indonesian kretek segment with a target market for adult smokers. The target market of cigarettes Avolution is aged adults aged between 25 to 29 years
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Market Positioning
LOW PRICE
LOW QUALITY
HIGH PRICE
HIGH QUALITY
Sampoerna
Bentoel
Djarum
Gudang Garam
Dunhill
Pall Mall
Apache
Marlboro
Esse
La Light
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HM SampoernaFinance
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Financial Highlight
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Cont.
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Asset of HM Sampoerna
Current assets were IDR 21.2 trillion as of December 31, 2013, relatively the same as at 31 December 2012
Noncurrent assets were slightly higher at IDR 6.2 trillion as of December 31, 2013 compared with IDR 5.1 trillion as of December 31, 2012
Total assets increased from IDR 26.2 trillion as at December31, 2012 to IDR 27.4 trillion as at December 31, 2013
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Capital of HM Sampoerna
Net cash used in investing activities increased from IDR 0.9 trillion in 2012 to IDR 1.1 trillion in 2013
Driven primarily by higher capital expenditure by IDR 0.7 trillion to IDR 1.5 trillion in 2013
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Financial Objective - Revenue
Revenue: Sampoerna’s excise payment contributed 29.6% of Government excise revenue from tobacco products in 2013 of IDR 103.6 trillion*
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Financial Objective - Profit In 2013, total financing income was IDR 49
billion, mainly representing interest income generated from cash in bank and receivable from related parties
Profit attributable to the Owner of the Parent for 2013 was IDR 10.8 trillion, up by 8.8% from the IDR 9.9 trillion achieved in 2012
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HM Sampoerna Research & Development
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ObjectivesAs we know from the HM Sampoerna long term objectives : To offer the best smoking experince to adult smokers
in Indonesia Continually seeking out what adult smokers prefer and
delivering the best products to match their expectations
Create a reputation for quality innovation as well as high corporate governance standard
In order keep it’s competitive advantages in balance, HM Sampoerna should conduct a proper Research & Development methods that can fulfilled those objectives as a parameter for their proper research developments.
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R&DWe emphasize several aspects that suitable with the company long term objectives :1. Conduct a periodical survey regarding to the costumer satisfaction of
their smoking experiences while they are consuming HM Sampoerna products & compare with the other brand.
2. After the surveys and questionnaires, the results from the data collection were analyzed by HM Sampoerna R&D department in order to analyze the changing pattern of the costumer preferences and match with their demands.
3. HM Sampoerna was the pioneer of the mild clove cigarette since a long time ago, so it is very famous among Indonesian smokers and HM Sampoerna has a strong brand identity. Beside the strong brand identity that the company has, HM Sampoerna comitted to keep it’s a quality in a sustainable top performace. That’s why all of it’s product line has their own costumer segmentation that keep grows the time by time.
4. As we know that hM Sampoerna was sold to Phillip Morris international, so the business activities starting from it’s acquition period untill are using the same R&D method from the previous owner (Putera Sampoerna).
5. Even that the price of the Sampoerna mild variants are a little bit higher that the other competitiors, but the line of products for Sampoerna Mild dominate the market of the mild cigarette machine in Indonesia.
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Cost Contributor
We couldn’t find the exact contribution percentage of the total cost that HM Sampoerna spend since in R&D activities because it is not mentioned in it’s annual report.
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HM Sampoerna MIS
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MIS Technology is used by HM Sampoerna ERP (enterprise resource planning )
from ORACLEInformation systems that support the transaction or the daily operations in the management of company resources. The resources include money, people, machines, spare parts, time, materials and capacity.
PeopleSoft HR
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MIS Implementation in HM Sampoerna Make the supply chain management
(supplier, warehouse,distribution,etc) more efficient and effective
Monitoring key performance indicator more better
support customer service, better support specific industry vertical (vertical industry), and also more supportive of the decision-making process (decision support)
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STRATEGIC MANAGEMENT
Agung AndaraRafa Najiya
Akyes DapilcaKenang Kana
Zul Asmi Retno
Chapter 9 Strategy review, Evaluation and
Control
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HM Sampoerna’s Present Strategy
1. Conduct the specific advertisement for the marketing
2. Personal Selling efficiency3. Quality control4. Products concistency
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STRATEGIC EVALUATION ASSESMENT MATRIX - HM SAMPOERNA TBK
HAVE MAJOR CHANGES OCCURED IN THE FIRM’S INTERNAL
STRATEGIC POSITION ?
HAVE MAJOR CHANGES OCCURED IN THE FIRM’S EXTERNAL STRATEGIC
POSITION ?
HAS THE FIRM PROGRESSED
SATISFACTORILY TOWARD ACHIEVING ITS STATED O BJECTIVES?
RESULT
NO YES YES TAKE CORRECTIVE
ACTION
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TAKE CORRECTIVE ACTION Alternatives1. Budget cutting cost2. Reduces marketing cost3. Increase product price4. Layoff current workforce
= so they can maintain their profit margin at least in the same rate as their current position
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HM Sampoerna is a pioneer cigarette company in Indonesia, so they have a strong brand awareness and for this short term period, they don’t need to change and implement any new strategy.
HM Sampoerna just have to be consistent with their current strategy, especially in their product variants quality.
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EFE – HM Sampoerna tbk.
Key External Factors Weight RatingWtd
Score
Opportunities1. Plan affirmation of "RUU Pertembakauan"
0.10 2 0.20
2. Indonesian smokers are the second highest in the world
0.20 4 0.80
3. Demand for cigarette increasing (8%) anually
0.15 3 0.45
4. Exporting of cigarette growing (7,4%- 10%) anually
0.10 3 0.30
5. Indonesia is growing 1.49% anually in population
0.10 3 0.30
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Opportunities (cont’d)
7. Variant invention 0.13 4 0.52
8. Smoking has became a new urban lifestyle
0.12 30.36
9. Inovation Of LTLN In Cigarette Product
0.10 4 0.40
Total 1.00 3.33
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Threats 1. Increase in cigarette’s tax rate of 8.72% on average
0.20 3 0.60
2. Trend towards healthy life 0.20 4 0.80
3. Increase in cigarette industry total production of 5.55%
0.10 2 0.20
4. Government Regulation Of Tobacco Advertising Restrictions
0.10 2 0.20
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EFE – HM Sampoerna tbk. (cont’d)
Key External Factors Weight RatingWtd
Score
Threats (cont’d)
5. Increasing on tobaco price of 25% 0.20 3 0.60
6. Demand for electric cigarette growing recently
0.05 1 0.05
7. Probability Indonesia join FCTC 0.10 1 0.10
8. MUI statement of cigarette prohibition 0.05 1 0.05
Total 1.00 2.60
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opportunityTotal weighted score of 3.33
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. is doing
excellent, taking advantage of the existing opportunities in its industry.
threats Total weighted score of 2.60
• Is above the average (midpoint) of 2.5• Indicates that HM Sampoerna tbk. is pretty
well in minimizing the potential adverse effect of external threats
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IFE – HM Sampoerna tbk. (2013)
Key Internal Factors Weight RatingWtd
Score
Strengths 1. Increasing in ROE 33% from 1750
to 2269 IDR0.10 4 0.40
2. Best company in term to satisfy the customers (2013award)
0.20 4 0.80
3. HMS is the market leader in Tobacco Industry
0.15 4 0.60
4. Increasing in total revenue by 12.6% 0.10 3 0.30
5. HMS has lot of variant product 0.10 3 0.30
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Strengths (cont’d)
7. HMS has loyal customers 0.10 4 0.40
8. HMS achieve 2013 Top Brand Award 0.15 4 0.60
9. Increased in customer 8,6% 0.10 3 0.30
Total 1.00 3.70
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Weaknesses 1. Decreasing in sales volume of SKT
13%0.10 2 0.20
2. Work termination of 2700 labors in 2 main factories
0.30 4 1.20
3. Unaffordable price caused by promotion and material cost
0.25 4 1.00
4. Slow growth on certain product 0.10 3 0.30
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IFE – HM Sampoerna tbk. 2013 (cont’d)
Key Internal Factors Weight RatingWtd
Score
Weaknesses (cont’d)5. Haven’t had the ability to compete in a Global Market
0.10 2 0.20
6. Inappropriate in capital allocation 0.15 4 0.60
Total 1.00 3.50
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strengthsTotal weighted score of 3.70
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. is doing
excellent optimizing their ability and resulting giving a power for them to stand as a market leader in its industry.
weaknessesTotal weighted score of 3.50
• Is near to the highest score of 4 • Indicates that HM Sampoerna tbk. Is doing
excellent managing their weaknesses so it won’t threaten their position in the market.
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HM SampoernaCSR AND BUSINESS ETHIC
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STRATEGIC MANAGEMENT
Agung AndaraRafa Najiya
Akyes DapilcaKenang Kana
Zul Asmi Retno
Chapter 10Business Ethics/ Social Responsibility/
Environmental Sustainability
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Business Ethics Issues
Controversial Tobacco Ad Pulled Following Public Outrage
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Contributions and Corporate Social Responsibility
Sampoerna believes that a sustainable business should look beyond financial growth and
performance. Instead, we must also make socially responsible investments in support of both people and planet. We are committed to sustainable social
investments that benefit our employees and business partners, environment, and communities where we operate and source tobacco and cloves.
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CSR
ACCESS TO EDUCATION
ECONOMIC OPPORTUNITY
EMPOWERING WOMEN
DISASTER RELIEF AND PREPAREDNESS
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ACCESS TO EDUCATION
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ECONOMIC OPPORTUNITY
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EMPOWERING WOMEN
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DISASTER RELIEF AND PREPAREDNESS
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Environtment Sustainability Issue
Restoration Spring Mountains Region ArjunaJune 25, 2013
PT HM Sampoerna Tbk. ("Sampoerna") today launched a restoration program springs Arjuna Mountains Region. With the launch of the program, Sampoerna 27,000 trees planted bamboo and manufacture of 100 recharge wells throughout the year 2013.
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Business Ethics
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Key Issues in CSR Labour rights:
◦ child labour ◦ forced labour ◦ right to organise ◦ safety and health
Environmental conditions◦ water & air emissions◦ climate change
Human rights◦ cooperation with paramilitary forces◦ complicity in extra-judicial killings
Poverty Alleviation◦ job creation◦ public revenues◦ skills and technology
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STRATEGIC MANAGEMENT
Agung AndaraRafa Najiya
Akyes DapilcaKenang Kana
Zul Asmi Retno
Chapter 11 Global/International Issues
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HM Sampoerna INTERNATIONAL EXPANSION MODEL
-Brunei Darussalam
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STEP 1 Population: 408,786 people Smoker: 9% from population or about
37,000 people GDP in 2013: 24184.67 US dollars GDP growth: 2.9%
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STEP 2: Political/Security Risk Political stability
Brunei has outstanding record of political stability that has been led by a benevolent monarchy that can be traced back, in an unbroken line of succession, over 600 years to when the first Sultan was installed in 1363.
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Protection from Tobacco in BruneiSmokefree HealthCare Facilities Yes
Smokefree Universities Yes
Smokefree Government Facilities Yes
Smokefree Indoor Offices Yes
Smokefree Restaurants Yes
Smokefree Pubs & Bars Yes
Smokefree Public Transport Yes
All Other Indoor Public Places Smokefree
No
Funds for Smokefree Inforcement No
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TOBACCO IN BRUNEI Brunei does not allow the tobacco industry to
participate in health policy development, accepts no contributions from the tobacco industry or CSR activities, gives no benefits to the industry, has no unnecessary interaction with the industry, and requires the industry’s representatives to provide information periodically. It must be noted that Brunei does not grow tobacco, has no cigarette manufacturing facilities, and has a very small tobacco market.
Brunei Darussalam became a Party to the WHO Framework Convention on Tobacco Control
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A. Culture and Lifestyle
Smoking in Brunei in the days of old was seen as a cultural thing. They said “if you do know how to smoke you have not grown up yet”
Cigarettes were not only served during wedding ceremonies but were also served during other social events as well, even strictly religious ones such as "tahlil" and "doa selamat" ceremonies, as well as circumcision events and the likes — in fact at any social gathering. Without cigarettes being served at the end of the meal, the event was seen as incomplete
Step 3- Business Initiation Easiness Assessment
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B. Procedure of Investment
The regulations require any person who imports, distributes, sells or offers for sale, permits to be sold or offered for sale or has in his possession for sale, any tobacco product to be licensed by the Director-General
Tobacco (Licensing of Importers, Wholesalers and Retailers) Regulations, 2007 establish the requirements to apply for and maintain a retail license and set forth the sanctions related to licensure violations
Cont. Step 3
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All tobacco products are imported, and the Ministry of Health, as the Tobacco License Authority, requires licenses for all importers and retailers of tobacco products. A retail license costs BND 300 per year, while an import license costs BND 2,500 per year
Cont.
Number of Licensed Tobacco Retailers and Importers in Brunei Darussalam, 2008-2012
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Government revenue from tobacco tax 2005 – 2011 (figures in USD)*
Cont.
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MANY small vendors have ceased selling tobacco products saying it is no longer profitable due to costly licensing and stricter policing from health authorities.
Business owners said the annual license to sell cigarettes has risen from $500 to $2,500, under amendments to the Tobacco Order, making the profit margin for selling cigarettes negligible for small businesses
Other convenience stores have also stopped selling cigarettes after the Ministry of Health informed them they were in violation of laws that prohibit businesses from selling tobacco products within a kilometre radius of schools
Step 4 – Industry Attractiveness
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Step 5 - Country Rank & Indentification of KSF
key success factors for preliminary investment
stage in Brunei Supportive Environment Infrastructure Flexible Policies Finance, Bank and Insurance Taxation
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Cont. - Country Rank & Indentification of KSF
The country with the lowest level of tobacco industry interference was Brunei (29) – the only country in Shoutheast Asian with a score under 50.
list of countries by annual per capita consumption of tobacco cigarettes brunei ranking is 72 with number per cigarette per adult per year 751.
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Step 6- Specific Internal Competitiveness Assessment
have a diverse and experienced team of professionals from seven different countries with an average experience of nearly 20 years in HM Sampoerna across a wide range of markets and functions
one key to the success of Sampoerna is adherence to the principles of good corporate governance,
Training programs are held regularly and closely monitored employee participation
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STEP 7: Entry Strategy Formulation Seeing the condition and the opportunity in Brunei’s
tobacco market. The best strategy to enter the market would be export products considering that Brunei doesn’t provide any facilities to support tobacco industry. Export can neither direct or indirect method such as agent or retailer.