THESIS PROPOSAL
Measure and Measurement in Benchmarking of KREASI and KUR( a study case in Perum Pegadaian and Bank Rakyat Indonesia )
Prepared By:Dian Karina Sutrimo
060613036
International Business Administration ProgramFaculty of Economics
Sam Ratulangi University2010
CHAPTER 1
INTRODUCTION
1.1 Research Background
Nowadays, actiivities of business become progressively tighter with the
existence of company competition to stay in the world of business. The impact of
globalization and economic development has pushed every company to be more
competitive than the others. This situation is already happening all over the world
even in Indonesia.
Indonesia as the developing country is influencing the business sector is
growth becoming faster. It also makes business be more innovative and creative to
stay alive. Every businessman has his own objective to reach his to make a profit.
Today’s companies, marketers and brands face an ever-changing
environment and with the continuing of the increase in consumers knowledge
about what they want and need. Companies should be more creative in their way
to offering products or services to their customers. A different perspective to
marketing is necessary to provide consumer effectiveness and efficiency in order
to attract cutomer’s awareness.
Competition happens in all business sectors. Each prospect is opened for
investors to compete with others. If the companies do not offering something new
and attractive to their customers, it is predictable that the customer will move to
other companies. What customers’ wants and needs are company’s priority to
provide. Outstanding marketing companies understand their customers’ needs and
wants. They conduct consumer research and benchmarking to analyze mountains
of customer sales, warranty and service data. Their people at all levels including
top management stay close to customers.
Therefore, many companies are challenged to launch products in the same
genre to prove to their customers which product is the best and making more
profitability than their competitors. Perum Pegadaian and Bank Rakyat Indonesia
are institutions that provide Credit feature for micro industry. It encourages the
writer to compare their products between KREASI (Kredit Angsuran Fidusia) and
KUR (Kredit Usaha Rakyat) and find out which one is the best-in-class
performance.
1.2 Research Problem
Based on the background above, this research will discuss more of the
following:
1. Which KREASI (Kredit Angsuran Fidusia) or KUR (Kredit Usaha
Rakyat) is the best product?
2. How does the performance of KREASI (Kredit Angsuran Fidusia) and
KUR (Kredit Usaha Rakyat) use the AHP method?
3. What are the key strengths for each product in capturing the market based
on the criteria developed in AHP?
1.3 Research Limitation
This research comes with several limitations. First, this research is
proposed to compare a product to another product in the same category in Perum
Pegadaian and Bank Rakyat Indonesia whiches are KREASI and KUR. Second,
this research determined to find out which is the best product in performances.
And third, Analytical Hierarchy Process (AHP) is the research method to analyze
the data.
1.4 Research Objective
The objectives of this research is:
1. To find out KREASI (Kredit Angsuran Fidusia) or KUR (Kredit Usaha
Rakyat) is the best product.
2. To examine KREASI (Kredit Angsuran Fidusia) and KUR (Kredit Usaha
Rakyat)’s performance using AHP.
3. To examine the key stregths of each product in capturing the market based
on the criteria developed in AHP.
1.5 Research Usefulness
This research provides several benefits as follow:
1. Faculty of Economics.
To give contribution in the scientific work about the benchmarking in two
companies which have the same products to offer in the market.
2. Perum Pegadaian and Bank Rakyat Indonesia.
As inputs to both company Perum Pegadaian and Bank Rakyat Indonesia
to define marketing strategies based on market and customers needs.
3. Researcher
The researcher may have a better knowledge about marketing
implementation especially in benchmarking. It also can improve the
analytical ability of researcher.
4. Could be one of references for the next researchers whom using the same
subject as mine.
1.6 Literature Review
Several literatures are used in the supporting of the research. They provide
the grand concept and link between the previous research and this research.
“Marketing Activities: A Comparative Analysis of Engagement and Participation
Among Buyers, Non-Buyers and Non-Responders of the Federal Long-Term Care
Insurance Program”. US. Department of Health and Human Services (2005)
The study purpose is to analyze survey data collected by Long term Care
Partners from members of the federal family regarding the LTC insurance
offering available to them, the analysis focuses on the attitudes, opinions, and
motivations of both active employees and retirees who have enrolled in the
program (“buyers”), those who have expressed an interest in the program but
chosen not to enroll (“non-buyers”), and those who are members of the federal
family but have not enrolled or expressed any interest in doing so (“non-
responders”). This study also compare the results to available data from other
studies of non-federal buyers and non-buyersin both the individual and group
markets to determine the extent to which there are significant differences which
could influence both the marketing and future design of LTC insurance.
The vast majority of those federal family members surveyed had contact with or
participated in at least some of the promotional and/or educational activities
implemented by the program sponsors. As expected, individuals who participated
in more activities, which they also found helpful, were more likely to become
buyers of the program. A multivariate analysis of the factors associated with
varying levels of participation in promotional/educational activities further
supports this finding. This suggests that the extensive marketing and educational
campaign by the program sponsors did influence buying behavior, and in a
positive way.
“Benchmarking Performance in The Credit Function”. (Ronald K. Chung, Ph.D
1993)
This article examines benchmarking as a management technique that
advocates comparison of the company’s performance levels to those of superior
(best) performers. This type of comparison allows management to not only obtain
better insight on what type of activity is most valued by customers but also better
learn about best practices and identify performance gaps. Improvement plans
developed as a result will also be superior to the ones based on traditional
approaches using historical trends because companies are competing under a
constantly changing, competitive environment.
For functional departments such as credit and account receivalbe, benchmarking
serves as an important diagnostic and planning tool. It not only alows the credit
executive to better identify and gain insight into opportunities within the
department, but can also serve as a tool to facilitate effective communication.
The benchmarking process starts with the identification of key success variables
of the function. Revenue and costs are the key success factors in credit
department. The next is to identify the key performance variables. Performance
benchmarking is for the evaluation of efficiency on the task(s) performed. The
Credit Research Foundation has suggested a list of measures that can be used to
gauge the efficiency and effectiveness of tasks performed by the credit, collection,
and accounts recievable functions. These include: Collection effectiveness index,
bad debt to credit sales, active customer accounts per credit and collection
employee, annual operating costs per employee, operating cost per sales dollar,
day sales outstanding, annual check turnover per cash applicator, annual
transaction turnover per accounts recievable employee, annua deductions
(adjustments) turnover per cash applicator and deduction specialist, annual
accounts receivable operating cost per transaction, annual operating costs per
accounts receivable employee.
After identifying the key succesful variables and the appropriate companies, the
next step is the measuring of performance. Through a comparison of performance
measures, performance gaps are recognized. These performance gaps identify
areas where improvement may be possible.
While the goal of benchmarking is to identify companies with superior
performance, and to use their performance levels to identify problem areas and
establish performance targets, the benchmarking effort must be translated into
actions to achieve maximum benefit. To get the most from the benchmarking, it is
necessary to take a result-oriented approached that deploys a strategic plan
leading to the achievement of long term objectives. It is also important for the
company to rcognize that benchmarking is a learning experience and a continuous
process. In the continuously changing competitive business environment, it is
necessary for companies to benchmark periodically to ensure that they have not
fallen behind as a result of the progress achieved by other companies.
Credit, collection and accounts receivable executives in 90s must adapt to the
continuously changing business environment. They must take control and lead the
credit function to higher performance levels. Benchmarking provides a road map
to effective management and is an important tool for executives aiming to
enhance the performance of the credit function.
“Journal of Strategic Marketing . Taylor and Francis (2010)
Journal of strategic marketing publishes papers on key aspects of the
interface between marketing and strategic management. It is a vehicle for
discussing long-range activities where marketing has a role to play in managing
the long-term objectives and strategies of companies. The objectives of the
Journal are as follows:
1. To bridge the disciplines of marketing and strategic management, and
to address the development to knowledge concerning the role that
marketing has to play in the management of strategy.
2. To provide a vheicle for the advancement of knowledge in the field of
strategic marketing and to stimulate research in this area.
3. To consider the role of marketing as an orientation of management at
the strategic level of organizations.
4. Explore the overall management of the marketing function within total
corporate management, with particular focus on issues of concern to
marketing managers, directors, and vice presidents.
5. To publish state of the art papers, empirical research results, practical
aspects of theory, case studies, new methodological developments,
conceptual developments, and to encourage publish discussion on
articles.
“Benchmarking for Competitive Advantage. Robert J Boxwell Jr, New York:
McGraw-Hill. 1994. pp. 225. ISBN 0-07-006899-2.”
Benchmarking is a highly-effective structural approach to quality
engineering and management that is finding wide acceptance among managers
everywhere. It involves investigating industry's best practices, analyzing and
evaluating one's own operation for opportunities, and implementing an action plan
that includes the structure of goals, objective, and operating targets. This sure-fire
guide shows managers, engineers, and quality personnel what the benchmarking
process is all about, how it can help them, and how they can implement the
process in their organization--to achieve spectacular results.
CHAPTER 2
THEORETICAL FRAMEWORK
2.1 Marketing
The word marketing was taken from the word Market. “Market is the set
of actual and potential buyers of a product or services”
Kotler, et.al (2005:5) defined Marketing is a social and managerial process
whereby individuals and groups obtain what they need and want through creating
and exchanging products and value with others.
Kotler and Amstrong (2004) also argued that “Marketing means managing
markets to bring out profitable exchange relationships by creating value and
satisfying needs and wants.
In defining the marketing concepts, among them should be understood the
element of the core marketing concepts, and the relation between them. “The
elements of core marketing concepts are needs, wants, and demands; marketing
offers (product, services, and experiences); values and satisfaction; exchanges,
transaction, and relationships and markets.” (Kotler and Amstrong, 2004).
Figure 2.1 Core Marketing Concepts
The most basic concept underlying marketing is that of human needs.
Human needs are states of felt deprivation, they include basic physical needs for
food, clothing, warmth, and safety; social needs for belonging and affection; and
individual needs for knowledge and self-expression. These needs were not created
by marketers; they are a basic part of human makeup. Wants are the form human
needs take as they are shaped by culture and individual personality. Wants are
CoreMarketing Concepts
Value and satisfaction
Exchange, transactions, and
relationships
Marketing Offers (Products, services,
and experiences)Markets
Needs, wants, and demands
shaped by one’s society and are described in terms of objects that will satisfy
needs. Wahen backed by purchasing power, wants become demands. Given their
wants and resources, people demand products with benefits that provide the most
value and satisfaction. (Kotler, et.al, 2005:5)
In economics, marketing is part of the process of production and exchange
that is concerned with the flow of goods and services from producer to consumer.
In popular usage it is defined as the distribution and sale of goods, distribution
being understood in broader sense than the technical economic one. Marketing
includes the activities of all those engaged in the transfer of goods from producer
to consumer not only those who buy and sell directly, wholesale and retail, but
also those who develop, warehouse, transport, insure, finance, or promote the
product, or otherwise have a hand in the process of transfer.
According to Kotler (2003), “Marketing is typically seen as the task of
creating, promoting, and delivering goods and services to consumers and
business.”
2.2 Competitive Advantage
According to Kotler, et al (2005:462) competitive advantage is an
advantage over competitors gained by offering consumers greater value
than competitors offer.
To gaining competitive advantage requires delivering more value and
satisfaction to target consumers than competitors do.
2.3 Competitor Analysis
According to Kotler, et.al (2005:463) Competitor analysis is the process of
identifying key competitors; assessing their objectives, strategies, strengths,
weaknesses, and reaction patterns; and selecting which competitors to attack or
avoid. Competitor analysis involves first identifying and assessing competitors
and then selecting which competitors to attack or avoid.
2.3.1 Identifying Competitors
Normally, identifying competitors would seem a simple task. At the
narrowest level, a company can define its competitors as other companies offering
similar products and services to the same customers at similar prices. Thus, Coca-
Cola might view Pepsi as a major competitor, but not the local bookstore down
the road. And Toyota might see Honda as a major competitor, but not Mercedes or
Hyundai.
2.3.2 Assessing Competitors divided by four steps:
Determining Competitors’ Objectives.
Identifying Competitors’ Strategies
Assessing Competitors’ Strengths and Weaknesses
Estimating Competitors’ Reaction
2.3.3 Selecting Competitors to attack and avoid
A company has already largely selected its major competitors through
prior decisions on customer targets, distribution channels, and marketing-
mix strategy. Management now must decide which competitors to compete
against most vigorously.
2.3.4 Designing a Competitive Intelligence System
The competitive intelligence system first identifies the vital types of
competitive information and the best sources of this information. Then, the system
continuously collects information from the field (sales force, channels, suppliers,
market research firms, trade associations, Web sites) and from published data
(government publications, speeches, articles).
With this system, company managers will receive timely infromation
about competitors in the form of phone calls, e-mails, bulletins, newsletters, and
reports.
2.4 Benchmarking
According to Kotler et.al (2005:465) Benchmarking is the process of
comparing the company’s products and processes to those of competitors or
leading firms in other industries to find ways to improve quality and performance.
Kotler and Keller (200 :323) defined Benchmarking is the art of learning
from companies that perform certain tasks better than other companies. The aim
of benchmarking is to copy or improve on “best practices”, either within an
industry or across industries.
Benchmarking involves seven steps:
1. Determine which functions to benchmark;
2. Identify the key performance variables to measure;
3. Identify the best-in-class companies;
4. Measure performance of best-in-class companies;
5. Measure the company’s performance
6. Specify programs and actions to close the gap; and
7. Implement and monitor results.
2.4 Conceptual Framework
Conceptual frameworks identifies and labels the important variables in the
situation that are relevant to the problem defined. It describes the connection
among variables. Sekaran (2003:97) noticed the theoretical framework is the
foundation in which the entire research project is based.
CHAPTER 3
CollateralTime Length
Interest of Loan
Requirements Convenience
Measure and Measurement in Benchmarking of KREASI and KUR
(a study case in Perum Pegadaian and Bank Rakyat Indonesia)
KREASIKUR
Analytical Hierarchy
Result
Conclusion and Recommendation
RESEARCH METHOD
3.1 Source of Data
There are several data collection methods, each with its advantages and
disadvantages. Problems researced with the use of appropriate methods will
greatly enhance the value of the research.
Sekaran (2003:223) noticed “data collection method is an integral part of
research design”. Every data collection needs some source of evidence. According
to Yin (1994) “there are six sources of evidence, namely, documents, archival
records, interviews, direct observation, participant observation and physical
artifacts. Off course not all of the sources will be appropriate for all cases”.
However, Yin (Ibid) pays intention to so called “triangulation” that is collecting
data at least from two sources in purpose to validate them. All of the data sources
on this research are gathered from primary data and secondary data. Sources of
evidence to obtain data necessary to answer the research question are
questionaires and inteviews (as primary data) and documents (as secondary data).
There are two types of data:
3.1.1 Primary data
Primary data are original data collected for the research problem. When
secondary data is not available or is unable to help answer the research questions,
primary data is collected, which is relevant to the study and research problem.
Primary data are data gathered for research from the actual site of
occurrence of events (Sekaran 2003:59). According to Malhotra (1999) “Primary
data are originated by researcher and used for the specific purpose”. The primary
data are collected from quetionnaires and face-toface interviews. The
questionnaire is a preformulated written set of questions to which respondents
record their answers, ususally within rather closely defined alternatives. The
questionnaire is an efficient data collection mechanism which measures the
variables of interest (Sekaran 2003:236). The questionnaires in this research were
personally administered questionnaires, to which the respondent reads the
questions and responds directly. The main advantage is the information can be
collected with completed responses with a short period of time.
Interview is one method of collecting data to obtain information on the
issues of interest (Sekaran 2003:225). According to Yin (1994) “the interview is
one of the most important sources of case study information”. The type of
interview is face-to-face interview with the main advantage of is that the
researcher can adapt the questions as necessary, clarify doubts, and ensure that the
responses are properly understood, by repeating or rephrasing the questions. The
researcher can also pick up nonverbal cues from the respondent. Any discomfort,
stress, or problems that the respondent experiences can be detected through
frowns, nervous tapping, and other body language unconsciously exhibited.
Queationaires and interviews are purposed to get consumer opinions about how
the prformances of KREASI and KUR.
3.1.2 Secondary data
Secondary data refers to information perpared by someone else that is
useful to support this research. The secondary data are needed to support the
primary data.
Data are data gathered such existing sources called secondary data
(Sekaran 2003:59). Secondary data are information collected by others for
purposes which can be different from ours (Ghauri 1995). Secondary data is not
gathered for the immediate study at hand but for some other purpose.
Documentation is considered as the secondary data. According to Yin
(1994) documents can be found in form of: letters, memoranda, agendas,
announcements and minutes of meeting, administrative documents, formal studies
or evaluations of the same “site” study, newspaper clippings and other articles
appearing in the mass-media. A researcher needs to remember to confirm and
augment evidence from other sources (Ibid). churchill and lacobucci (2005) divide
secondary data on two types, namely internal and external. Internal data is
originated within the firm, and external outside the company. Internal secondary
data have their advantages in their ready availability and low cost. This research is
going to use internal source of documentation in form of company’s data retrieved
from the company’s web sites. Data from articles, journals and the library are the
secondary data collected to support this research. The advantage of seeking
secondary data is it saves time and cost in acquiring information.
3.2 Population and Sample
The population and sample of this research are orientated to Manado’s
society. Categorization of the population and sample are the customers of Perum
Pegadaian and Bank Rakyat Indonesia.
Population
Population refers to the entire group of people, events, or things of
interest that the researcher wishes to investigate. The population of
this research is Manado citizens as the customers of Perum Pegadaian
and Bank BRI whom using KREASI and KUR.
Sample
A sample is a subset of the population Roscoe (1975) noticed sample
sizes larger than 30 and less than 500 are appropriate for most
research. The sample covers 100 respondents. Sample are 50
customers of Perum Pegadaian and 50 Bank Rakyat Indonesia in
Manado, they discuss about KREASI and KUR performances.
3.3 Definition of Variables
The first step in AHP is to ignore the other factors and the way to reach each
objective and evaluation criteria, and just to decide the relative importance of the
criteria by comparing each pair of criteria and ranking them on the following
scale.
Factors :
a. KREASI (Perum Pegadaian)
b. KUR (Bank Rakyat Indonesia)
The key performance variables to measure:
a.. Requirements
Requirements needed to process the proposal that forwarded to Bank Rakyat
Indonesia and Perum Pegadaian. And to defined which is the easiest procedure
between KREASI or KUR.
b. Time length to liquid the fund
How long the time needed to process the proposal that already forwarded to
Bank Rakyat Indonesia and Perum Pegadaian.
c. Interest of loan
How many percents of the loan that Bank Rakyat Indonesia and Perum
Pegadaian charged to their customers.
d. Collateral
What kind of collateral that Bank Rakyat Indonesia and Perum Pegadaian
defined as collateral.
e. Convenience
Refers to company’s effort in way to satisfying their customers wants and
needs. Criteria used in this research are
Branch office: This represents the place where can be easily reached
by the customers.
Services: This represents how good company trained their employees
in order to fulfill their customer’s needs.
3.4 Data Analysis
3.4.1 Analytical Hierarchy Process (AHP)
The Analytical Hierarchy Process (AHP), developed by Thomas Saaty is a
method for ranking decision alternatives and selecting the best one when the
decision maker has multiple objectives, or criteria, on which to base the decision
maker has multiple objectives, or criteria, on which to base the decision. Thus, it
answers rhe questin “Which one?” a decision maker usually has several
alternatives from which to choose when making a decision. The decision maker
usually would typically make a decision based on how the alternatives compare,
according to the several criteria. AHP is a process for developing a numeric score
to rank each decision alternative, based on how well each alternative meets the
decision maker’s criteria (Taylor 2007:370). The general mathematical process
involved in AHP is to establish preferences at each of hierachical levels. General
steps in Analytical Hierarchy Process (AHP) are:
1. Develop pairwise comparison, two alternatives are compared
according to the criterion, and one is prefered. These comparisons are
made by using a preference scale, which assigns numeric values to
different levels of preference. Then a pairwise comparison matrix
summarizes the pairwise comparisons for a criterion. The preference
scale for pairwise comparisons are as follow:
Preference Level Numerical
value
Equally preferred
Equally to moderately preferred
Moderately preferred
Moderately to strongly preferred
Strongly preferred
Strongly to very strongly preferred
Very strongly preferred
Very strongly to extremely preferred
Extremely preferred
1
2
3
4
5
6
7
8
9
2. Synthesization
The next step in AHP is to prioritize the decision alternatives within
each criterion. Steps in synthesization are:
a. Sum the values in each column of the pairwise comparison
matrices.
b. Divide each value in each column of the pairwise comparison
matrices by the corresponding column sum-these are
normalized matrices.
c. Average the values in each row of the normalized matrices-
these are the preference vectors.
d. Combine the vectors of preference for each criterion into one
preference matrix that show the preference for each criterion.
3. Develop a pairwise comparison matrix for the criteria.
4. Compute the normalized matrix by dividing each value in each column
of the matrix by the corresponding column sum.
5. Develop the preference vector by computing the row averages for the
normalized matrix.
6. Compute an overall score for each decision alternative by multiplying
the criteria perference vector by the criteria matrix.
7. Rank the decision alternatives, based on the magnitude of their scores
computed in step 6
Taylor (2007:376) noticed that AHP is based primarily on the pairwise
comparisons on a decision maker uses to establish preferences between decision
alternatives for different criteria. The normal procedure in AHP for developing
these pairwise comparisons is for an interviewer to elicit verbal preferences, using
the preference scale.
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