Business Environment Analysis on Pt Sumisho E-Commerce Indonesia

Dwitya Aribawa
General Business Environment

Todays Topics

Industry OVERVIEW Company

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Key Trends Analysis of External Business Environment

Opportunities Threats Business Implication

Industry Overview

Retrieved from: Veritrans and Daily Social. (2012). E-Commerce in Indonesia

Company Overview

Business External Environment Classification

Political Government, Domestic and International Issues

Economical Economic Development, Industry and Sectoral policies, Regional, and Monetary and Fiscal Issues
Social Social, Cultural, Demographical and Natural Issues Technological Processing and Information Issues

Governmental
Domestic International

 Issues: Public governance in Indonesia (infrastructures, regulations, facilitation). Indonesia Country Ranking for Doing Business Index (113/185) and Corruption Perception Index (100/183).
OPPORTUNITIES THREATS Industry has get attention and develop by According to doing business criteria, the government (by assign Specific Ministry). infrastructure is still arising problem.
UU ITE is well implement to regulate online transaction more safe and secure.. Business may be boot-strapped as the public bureaucracy remains inefficient.

Governmental Environment

Business Implication
Sukamart need to be a part of idEA Indonesia and create a synergy with government policy in order to accelerate economic growth.

 Issues: Political equality and popular control of public affairs in democracy era. Indonesia Election is always appearing insight of chance and risk for a business.
OPPORTUNITIES Decentralization arise good chance to expand business in outside Java island
Public Private company partnership tend to be challenge in democracy era.

Domestic Political Environment

THREATS
The arise of uncertainty from Election may force business to hold investment.

Business Implication
Be anticipate of election 2014, create collaboration with government (especially in procurement) regarding to support election.

 Issues: IndonesiaJapan long term business relations. IndonesiaMalaysiaThailand Growth Triangle (IMT-GT) that support equality of income in Indonesia, especially for Sumatera island.
OPPORTUNITIES Indonesia and Japanese products can able to available in Sumitomo Chain Stores. IMT-GT collaboration appearing positive insight for sukamart to expand ASEAN business chain start from Indonesia. THREATS No tariff from China products can be threatening Sukamart. Using local product campaign may lowering the revenue from Japanese product that imported by Sukamart.

International Political Environment

Business Implication
Integrating global supply chain of sumitomo will be the internal competence to sukamart that operate in Indonesia. Product that sell in Indonesia may can be present also in Japan, vice versa.

Economical Environment
Economic Development Industry and Sectoral Policies

Regional Economy

Monetary and Fiscal Policies

Economic Development

Issues: Private consumption expenditure contribute in average 55% (1st Semester) from the total of GDP (BPS, 2013). Through the ICT, government is consistently encouraging economic growth (creating jobs, empowerment programs).
OPPORTUNITIES Growing of ICT users will be derives new orientation of consumption. THREATS Sukamart consist of some import product from Japan, that increase net of import.

Consumer goods (grocery) market in Indonesia is treated well by government as a backbone of Indonesia GDP.

Pure online interface shop make Sukamart only needs people in back office and warehouse service.

Business Implication
E-Commerce is a sophisticated business opportunity. Economic stability of Indonesia and support from banking will be essential.

Regional Economy

Issues: E-Commerce Industry has a huge leap to minimizing the boundary between countries to doing business. +3 Countries (Japan, China and Korea) export more to Indonesia rather than import (Trade Intensity Index).
OPPORTUNITIES THREATS Asia Pacific Regional Free Trade plan will be positive issue to Sukamart ( tariff). There are limited brands of Indonesian products (grocery) that ready to global. Exchange products through country based on Sumitomo chain of stores.

Business Implication
Integration based on regional relationship will be important to asses by Sukamart as a competitive advantage for corporation globally.

Industry and Sectoral Policies

Issues: E-Commerce as a part of ICT Creative Industry planned by government to greatly contribute to economic welfare. ICT Industry will be prioritize as a industry that has high growth rate or called future industry for Indonesia.
OPPORTUNITIES Government instructed to support ICT business in term of bank funding. Tax allowance for communication products (e-business infrastructure). THREATS Human capital (employees) that still have to developed in order to meet the needs of Industry development.

Business Implication
Sukamart open the rivalry in new arena of retail B2C e-commerce, big player such as Carrefour plan to extend to this business model.

Monetary and Fiscal Policies

Issues: BI decision to raise the reference interest rate was aimed at making Rupiah more attractive as an investment. Directorate General of Taxes plan to taxing online transaction in Indonesia.
OPPORTUNITIES As downturn economic trends, Sukamart should be support SMEs products. THREATS Sukamart should wait the economic condition in the right period of invest.

When the tax granted to e-commerce transaction that must be included input by government (such as infrastructure).

Sukamart should be consider about how that tax treated (fully paid by company, customers or both.)

Business Implication
Monetary and fiscal policy that impact in e-business must be beneficial for business and government (input and feedback).

Social Environment

Demographical Environment

Social Environment

Issues: Y Generations demanding a new way to shopping, tendency of live individually and they think about time efficiency. Growing of middle class (higher level of social class) people in Indonesia.
OPPORTUNITIES Sukamart answer a growing need among parents and working professionals to fit time-consuming grocery shopping. Indonesian middle class that demanding more healthy and easy to reach products. THREATS

Multiplier effect from social media negative comment from Sukamart.

Business Implication
Sukamart have to provide excellent quality of services and provide reliable center of information to meet customers satisfaction.

Cultural Environment

Issues: Culture is applies to international business and business people should be aware in order to doing business abroad. Business is very sensitive aspect of human interaction in Indonesia (do not harm people by doing business).
OPPORTUNITIES Sumitomo holdings has good long term track record in Indonesia business. THREATS To majority of Indonesian, changes in behavior become a particularly difficult situation.

Indonesia business climate demonstrating loyalty and trustworthiness is critical to maintaining a good relationship.

Business Implication
Sukamart faces the unique culture of Indonesia market. Very promising in one side but other side insight resistance to changes.

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Natural Environment

Issues: Clean production will help the industry save energy and material, while at the same time reduces emission. Developing cleaner and more efficient industrial and commercial sector for the Indonesian environment.
OPPORTUNITIES Sukamart has adopted the phrase "Less Traffic Jam, More Quality Time" as their (Green) service motto. THREATS ICT infrastructure needs a huge space and un-renewable resources investment, for instance in cabling or hi-tech warehouse.

Business Implication
Green motto of sukamart will be able to extend as a green business model for services and warehousing system.

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Demographical Environment

Issues: Demographic shift, Demographic Bonus and rapidly growing middle class are reshaping the business climate. GINI coefficient rose 34.1% 38.1% (Worldbank, 2012), reflecting greater income inequality (wider wealth gap).
OPPORTUNITIES THREATS Emerging market will create opportunities Difficulty to broaden market outside related to smart technology, and they will Java Island, lack of the logistic ability and not be limited to for-profit enterprises. infrastructure being barriers to entry.

Demanding on middle class of people to reach product faster and easier.

Tendency to enter middle class trap, since people not build human capital.

Business Implication
Now, Sukamart still targeted market in Java island, so demographic environment can be seen as advantages for them.

Processing Technology

Information Technology

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Processing Technology

Issues: Whether its B2C or B2B, buyers from around the world are using personal computers and gadget to purchase everything from groceries to airplane parts and more.
OPPORTUNITIES THREATS Mobile/gadget based order processing will Sukamart did not take a part in delivering be interesting to develop by Sukamart. process , they trust this significant part to Integrating warehouse management JNE as a partner to deliver products. system and e-ordering system.

Business Implication
Latest innovation of technology in order to support integration of ordering, warehousing and delivering will be improve business process of Sukamart.

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Information Technology

Issues: Retailers has concern to transform operations through the creative deployment of todays information technologies for a significant competitive advantage.
OPPORTUNITIES Demand wave from e-channeling (social media, online forum and digital content). THREATS Rapid IT development will tend Sukamart spend much capital based on IT driven.

Growing of online & mobile ads as a part Needs an integration information system of the new way to promoting business. between suppliers and Sukamart.

Business Implication
As the first mover of grocery e-commerce market in Indonesia, Sukamart able to set the standard of IT business model.

Strategic Recommendation
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External Factor Analysis Summary Table

External Factors (Opportunities & Threats) 1) Governmental Environment 2) Domestic Politic 3) International Politic 4) Economic Development 5) Industry and Sectoral policies 6) Regional Economy 7) Monetary and Fiscal Policies 8) Social Environment 9) Cultural Environment 10) Demographical Environment 11) Natural Environment 12) Processing Technology 13) Information Technology Total Weight 0.025 0.050 0.050 0.025 0.050 0.050 0.100 0.150 0.025 0.100 0.025 0.200 0.150 1 Rating Weighted Score

Thank You

Change brings opportunities. On the other hand, change can be confusing. - Michael Porter [Harvard Professor]