international business & corporate strategy of wijaya karya
TRANSCRIPT
INTERNATIONAL BUSINESS STRATEGY OF WIJAYA KARYA
Thursday, December 10, 2015 | Presented by Alma Sardadi, Nurul Jannah & Melvin Hade
MGMT 11023 International Business
INDUSTRY & COMPETITOR
ANALYSISAlma & Melvin
CORPORATE STRATEGY
Melvin Hade
COMPANY PROFILE
ORGANISATION STRUCTURE & CULTURE
Alma Sardadi
Nurul Jannah
Opening Video
COMPANY PROFILEAlma Sardadi
HISTORY OF THE BUSINESS
➤ WIKA was formed through a nationalisation process from a Dutch company named Naamloze Vennotschap Technische Handel Maatschappij en Bouwbedijf Vis en Co.
➤ Perusahaan Negara Pembangunan Widjaja Karja.
➤ Started as a electrical and water-pipe installation business.
➤ Early 1960s: Constructed Gelanggang Olah Raga Bung Karno
➤ 1972: Transformed into PT. Wijaya Karya.
➤ 1982: Major expansion of new divisions (Construction Civil, Industrial Construction, Concrete and Metal Products, Housing Divisions.
NATURE OF THE BUSINESS
MAIN SUBSIDIARIES OF WIJAYA KARYA
GLOBAL PRESENCE
Myanmar Algeria Libya Brunei
United Arab Emirates
IndonesiaTimor LesteSaudi Arabia
Toll Road
Oekusi Airport Infrastructure Apartment
ApartmentShopping CenterMulticomplex
Hotel
Residential Project
Office Building
Infrastructure
Representative Office
Shopping Center Buildings
Energy
Industry Material
Commercial Building
INDUSTRY & COMPETITOR ANALYSIS
Alma Sardadi & Melvin Hade
DOMESTIC COMPETITOR ANALYSIS
Wijaya Karya
Waskita Karya
PTPP
Adhi Karya
Hutama Karya
Total Bangun
Jaya Konstruksi
Multi Structure
Nusa Raya Cipta
Brantas Abipraya
0 350 700 1050 1400171.7
210.9
260
412
430
524.8
794.5
800
917.5
1,234.2
124.7
173.8
217
353
390
375.2
735.7
620
799.4
976.6
2011 2012
Top 10 Contractors in Indonesia (in million US$)Source: Indonesia Contractor Association
INTERNATIONAL COMPETITOR FROM INDONESIA
Source: Processed by Hafiz Zahoor from Indonesia Construction Company Data
Companies Project Type Location Year
HUTAMA
Road infrastructure Malaysia 1990-1993Road infrastructure Philippines 1996-1999
Administration building Brunei 2012Road infrastructure Algeria 2007Shopping Complex Libya 2010
Power Plan Timor Leste 2011
WIKA
Road infrastructure Papua New Guinea 2011Road infrastructure Brunei 2012Road infrastructure Timor Leste 2012
Housing Algeria 2013Hotel & Apartment Qatar 2006
Commercial Complex Oman 2007Railway India 2007
Apartment and Commercial Building
UAE 2006
WASKITA
Educational building Saudi Arabia 2012Religion Building Saudi Arabia 2013Airport Upgrading Timor Leste 2013
PT. PPAdministration Building Timor Leste 2012
Shopping Complex Timor Leste 2013
INTERNATIONAL COMPETITOR ANALYSIS
Countries Number Revenue Overseas Rev.
% of Overseas Number Revenue Overseas
Rev.% of
Overseas
China 41 438,303 59,125 13,5 50 497,908 66,000 13.26
US 35 126,278 57,036 45.2 42 167,675 78,481 46.81
South Korea
14 64,179 25,935 40.4 14 82,663 41,134 49.76
Japan 13 103,384 17,854 17.3 15 101,861 21,016 20.63
Italy 13 37,184 31,333 84.3 11 33,582 28,472 84.78
Spain 12 140,830 60,228 42.8 11 98,311 72,690 73.94
Turkey 12 13,345 9,362 70.2 10 12,712 8,482 66.72
Countries Having the Biggest Number of Contractor of Companies Performing Overseas Projects (in Millions USD)
Source: Processed by Hafiz Zahoor from 225 Construction Companies (2012 and 2013)
2012 2013
ORGANISATION STRUCTURE & CULTURE
Nurul Jannah
ORGANIZATIONAL CULTURE
➤3 Components: ➤Based on Wijaya Karya’s Vision ➤Based on Wijaya Karya’s Motto ➤Company Values
ORGANIZATIONAL CULTURE
➤Vision: To become the best and most i n t e g r a t e d E P C ( E n g i n e e r i n g , Procurement and Construction) and Investment Company.
➤Motto: Spirit of Innovation
COMPANY VALUES
Innovation
Balanced
Excellence
Commitment
Relationship Integrity
Teamwork
Values of WIKA
CENTRALIZATION VS DECENTRALIZATION
➤Huge company, not only operates in Jakarta, but all over Indonesia.
➤Not only Indonesia, but 7 other countries ➤More to Decentralisation (esp. Operations):
➤ Huge company which not only in Jakarta ➤ Have a better company ➤ Permits greater flexibility and more rapid
response
HOFSTEDE’S DIMENSION
➤Power Distance: Medium to High Power Distance
➤Collectivism: ➤Rooted in the Indonesian culture and
values ➤Nature of WIKA’s business and projects
➤Masculinity vs Femininity: Medium ➤Uncertainty Avoidance: Medium
Add in the final paper
HOFSTEDE’S STUDY
78 48 14 46
ORGANIZATIONAL STRUCTURE
➤Functional Structure: 5 Main Functions ➤I n t e r n a t i o n a l D i v i s i o n : O n e
department deals with domestic projects and one department dea ls with international projects
➤Matrix Structure: Project level, each project has its own matrix structure
BOARD OF DIRECTORS
➤President Director: Bintang Perbowo ➤Managing Directors:
➤1 Human Resources Director ➤1 Finance Director ➤4 Operational Director
1 President Director, 1 HR Director, 1 Finance Director, 4 Operational Director
STAFFING POLICY
➤Adopts ethnocentric staffing policy. ➤Sends thousands of workers and
engineers to Algeria and Libya for construction projects.
➤Benefit: Opportunity for Indonesian nationals to be hired for international projects
CORPORATE STRATEGY
Melvin Hade
- Bintang Perbowo, President Director of WIKA
“Sementara untuk strategi eksternal, WIKA menerapkan pola kerjasama sebagai
kontraktor dengan perusahaan luar negeri maupun lokal negara setempat. WIKA juga
menerapkan pola Joint Venture. ”
ENTRY-MODE STRATEGY
Strategic Alliance
FDI
Joint Venture
EVALUATION OF ENTRY-MODE STRATEGY
➤ Short-Term Business Opportunity: Strategic Alliance ➤ Long-Term Business Opportunity: FDI/Joint Venture ➤ Suggested Entry-Mode Strategy: Strategic
Alliances ➤ Advantages of Strategic Alliances:
➤ Sharing of fixed cost with partners ➤ Relatively less costly ➤ Less risk associated
STRATEGY OF INTERNATIONAL BUSINESS
Global Standardisation
Strategy
Transnational Strategy
International Strategy
Localisation Strategy
Higher Pressure for Localisation
Hig
her P
ress
ure f
or C
ost R
educ
tion
INTERNATIONAL STRATEGY
➤ Low cost pressures + low pressure for local responsiveness
➤ Minimal product customisation ➤ Selling products that serves universal
needs , but they do not face significant competitors.
➤ Firm can charge higher prices, since low competition
➤ Centralise product development and R&D in home country
GLOBAL STANDARDISATION STRATEGY
➤ Global Standardisation Strategy focus on profitability and profit growth by using cost reduction that comes from economies of scale and learning effects.
➤ Low-cost strategy on a global scale.
➤ High pressure for cost reduction, low pressure for local responsiveness.
➤ Minimal product customization
➤ Standardised product worldwide to benefit from economies of scale and learning effects.
EVALUATION OF STRATEGY
➤ High Competition: Global Standardisation Strategy
➤ Low Competition: International Strategy
➤ Suggested Strategy: Global Standardisation Strategy
➤ High Levels of Competition: Higher competition forces WIKA to offer competitive pricing in order to win project tenders.
➤ Developing Markets: Most international market that WIKA penetrated are developing markets.
➤ Government of developing countries have limited budget > pressure for cost reduction.
➤ Nature of Business: Serves universal needs, low customisation needed and WIKA is an Indonesian company with no int’l experience
DRAWBACKS OF STRATEGY
➤ Drawbacks of Strategic Alliances:
➤ Give out managerial and technical know-how to partners who can be competitors in the global market.
➤ Some risk may still be associated such as conflict with partners
➤ Drawbacks of Global Standardisation Strategy:
➤ Macroeconomics Risk: Changes in government policy and regulations regarding construction and infrastructure.
➤ Social/Demand Risk: When there are sudden changes in demand, where demand for local responsiveness are high, Wijaya Karya products may not be suitable anymore.
➤ Operational Risk: Changes in employment laws, minimum wages and operational laws.
CONCLUSION
Entry-Mode Strategy IB Strategy Organisational Structure
Organisational Culture Domestic Competitor Global Competitor
Strategic Alliances
Global Standardisation
Strategy
Functional Structure
Medium-High Power Distance & High Collectivism
International Division
Matrix Structure
REFERENCES"Company Profile." Wijaya Karya. Web. 1 Dec. 2015. <http://www.wika.co.id/id/pages/commitment>.
Dr. Sudarto. "Overview of Construction Services & Industry in Indonesia." 2011. Web. 3 Dec. 2015. <http://indonesien.ahk.de/f i l e a d m i n / a h k _ i n d o n e s i e n / B i l d e r / T r a d e _ _ F a i r s /b a u m a _ 2 0 1 3 _ I n d o n e s i a _ D a y _ p p t s /1140_Indonesia_Contractor_Association.pdf>.
"Facts Of Myanmar’s Building & Construction Industry." Build Myanmar. Web. 3 Dec. 2015. <http://www.buildmyanmar.com/post/256/Industry-Facts.html>.
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"PT Wijaya Karya." BUMN RI. N.p., 2015. Web. 3 Dec. 2015. <http://www.bumn.go.id/wika>.
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Great People, Great Business by Rini M. Soemarno.
"Wika Akan Agresif Di Luar Negeri." Berita Satu. Web. 3 Dec. 2015. <http://www.beritasatu.com/pasar-modal/238080-wika-akan-agresif-di-luar-negeri.html>.
"Wijaya Karya Sembilan Proyek Konstruksi Di Luar Negeri." Merdeka. Web. 3 Dec. 2015. <http://www.merdeka.com/uang/wijaya-karya-sembilan-proyek-konstruksi-di-luar-negeri.html>.
"Wijaya Karya Dipercaya Garap Proyek Besar Aljazair." VivaNews. N.p., 8 Jan. 2013. Web. 1 Dec. 2015. <http://bisnis.news.viva.co.id/news/read/380462-wijaya-karya-dipercaya-garap-proyek-besar-aljazair>.
"Wijaya Karya Sembilan Proyek Konstruksi Di Luar Negeri." Merdeka. N.p., 29 Jan. 2015. Web. 3 Dec. 2015. <http://www.merdeka.com/uang/wijaya-karya-sembilan-proyek-konstruksi-di-luar-negeri.html>.
"Wijaya Karya to Boost Overseas Portfolio." The Jakarta Post. 10 Jan. 2014. Web. 03 Dec. 2015. <http://www.thejakartapost.com/news/2014/01/10/wijaya-karya-boost-overseas-portfolio.html>.
"Wijaya Karya Profile." Reuters. N.p., 2015. Web. 3 Dec. 2015. <http://w w w. r e u t e r s . c o m / f i n a n c e / s t o c k s / c o m p a n y P r o f i l e ?symbol=WIKA.JK>.
END OF PRESENTATIONThursday, December 10, 2015 | Presented by Alma Sardadi, Nurul Jannah & Melvin Hade
MGMT 11023 International Business