GEROLAGA, ALYANA CIELINE, C.

MGE 11A / BSACT2F MW / 10:30-12:00

Title of the case : Multi Bintang Indonesia Time Context : 1987

Summary of the Case / Abstract :

Mr. Tanri Abeng, formerly a Director at Pt. Union Carbide Indonesia joined Pt. Perusahaan Bir Indonesia in late 1979. A few months later, he became President Director. One of his earliest strategic undertakings was to rename the firm Pt. Multi Bintang Indonesia. For several years, the companys market share had been declining. The company had so many strengths to boast. But despite these, it had also many weaknesses. The company had no strategic plans. It had little urgency in management to develop an excellently managed company. It had been content to do what had been done in the past. And it lacked in imposing personnel policies. Throughout the years of operation, production had been decreasing. Since the end of 1983, the company could not produce as much as what had been produced in prior years. Production figures indicated that the beer companies operated much below their respective installed capacities. Imports of malt, which was the main basic material for beer brewing, rose from 1982 to 1983 but dropped in 1984. During the first six months of 1987, malt imports amounted to 4,133 tons valued at US$2.05 million far beyond malt imports on 1986 which is around 10,000 tons. Malt imports eventually stopped from some countries. Government restrictions on imports, the weak domestic market, and aggressive sales promotion by local brewers had sharply reduced beer import. Since 1986, foreign-made beer was still circulating in the domestic market but had no longer recorded by Central Bureau of Statistics. Beer imports would not likely resume in the years to come due to the government import restrictions and the market dominance by local brewers. The beer companies were still oriented largely to the domestic market but Pt. Multi Bintang had tried to penetrate the export market since the 1970s. Beer exports stopped in1983 apparently due to the strong domestic market demand in the year. The beer companies apparently are not so interested in entering the highly competitive international market.

Viewed from its big population, Indonesia is a potentially big market for beer buts its per capit is still very small because most of the people are Moslems do not like beer. Indonesian beer consumption which rose steadily until 1983 fell drastically in 1984 due to the weakening purchasing power of the general consumers. Buoyed by the high consumption in the early 1982, beer companies projected a rapidly expanding market and therefore expanded their production capacity. However, the beer market fell drastically in 1984 and has never reached the 1983 record. Obviously, several beer companies lost money due to the fierce competition. Even though Pt. Multi Bintang had faced several problems regarding its profits and losses, it stills the leading firm among the four big beer companies in Indonesia. Only Pt. Multi Bintang could still make profits even though at a decreasing amount while other companies steadily lost money.

I.

Statement of the Objectives : To continue to be the leader company beer in the market. To increase profit and decrease more the amount of loss. To reach the 1983 record where it got its highest peek.

II.

Central Problem What strategic plan should Pt. Multi Bintang Indonesia do to outrank the 1983 record and reach its target income?

III.

Areas of Consideration Strength Multi Bintang is the leading beer company among the four beer companies. Multi Bintang produces quality beer product. Companys cash flow was strong. Company was strong financially and technologically. Weaknesses The company has no strategic and marketing planning. The company has no vision view. The company has no goal. The company has no real personnel policies. The company has no management system. Weak purchasing power

Opportunities Better company promotion and advertising. Expansion of the business to other target country. Acquisition of rival firms Threats Increasing market competition Increasing import competition Moslems people dont like beer Older people prefer consuming wine to beer due to health problems Change in customers preference Government regulation, rules and policies Natural calamities

IV.

Alternative Course of Action These are the possible solutions to the problem with corresponding advantages and disadvantages. 1. Offering new flavors and launching new products The company will introduce new flavors of alcoholic beverages that will appeal to the taste of the customer. Customer will enjoy different kinds of flavors rather than a simple beer. Advantages : Possibly appealing to a more diversified consumer base Minimizes bitter taste that most beer possesses Increase in sales Disadvantage : Some customer prefer bitter taste or ordinary beer taste 2. Trade Strategy Trade promotion can persuade the retailer or wholesaler to carry more units than the normal amount. The company will offer volume allowances to get the trade to carry more in their warehouse and stores.

Advantages : Increase sales volume Accelerate the release of beers for distribution Disadvantage : Credit for product orders are only provided 3. Media Strategy Advertising can be used to build up a long-term image for a product. Advertising was emphasized by the company as a key factor in promotion and in stressing on value, identity of art, culture and tradition, sports, and excellence in society. Advantages : Persuades non-drinker to try the beer that is being promoted Communicate with possible customer or clients Disadvantage : Costly

V.

Strategy Formulation I therefore conclude that the best solution to the problem is alternate course of action # 1 which is offering new flavors and launching new products because of the following reasons : More customers will patronize with the new flavors because it will minimize the bitter taste that most of the drinkers (woman and teenagers) dont enjoy. Flavored beer can be presented during parties, get together, social events, etc. Cocktail drinks or imported beers ate usually expensive and doesnt taste like beer anymore.

VI.

Plan of Action 1. Make a market segmentation to know what flavored beer most of the consumer prefer so that the company will produce that prefer flavor. 2. Distribute product to areas with less Moslems population to avoid wasted consumption. 3. Customers in target areas must patronize the new beer product.

VII. Potential Problems 1. What if the action undertaken is not effective for the said company? 2. What if teenagers abused the consumption of the flavored beers which results of always being intoxicated? 3. What if there will be a threat of Moslems people that could manipulate some a part of target areas?

VIII. Contingency Plan 1. If the course of action does not work at all, the company can jump into other alternative courses of actions taking into account their respective advantages and disadvantages. 2. If teenagers abused the consumption of the flavored beers that resulted of being intoxicated, alcohol content of the beer will be reduced to avoid such situation. 3. If Moslems people will manipulate some target areas, the company will promote an effective advertisement to empower such manipulation.