Astra International

STRATEGIC MANAGEMENT IN BUSINESS Case Study: AUTO 2000

Eldo Wana Kusuma

1500005201

Arbeansyah Tegar

1500005864

Indra Ghana Radyasto

1500005845

Daniel Sitepu

1500005063

Sandy Kurniawan

1500005082

BINUS BUSINESS SCHOOL PROGRAM STUDI MAGISTER MANAGEMENT YOUNG PROFESSIONAL IN BUSINESS MANAGEMENT BINUS UNIVERSITY JAKARTA

2016

Introduction Executive Summary The company was first established on February 20, 1957 under the name of PT Astra International Incorporation (AII) by Drs. Tjia Kian Tie (Alm), Mr. William Soerjadja (Tjia Kiang Liong), and Mr. E. Hariman (Liem Peng Hong), which engaged in import-export business of agricultural products, inventory tools for PKA train (now PJKA), and materials for the development of hydropower Jatiluhur. Then in 1965 PT Astra International established its new buildings in Jakarta and Bandung (serve as branch offices). At that time, PT Astra International is engaged in importing heavy equipment and motor vehicles. Joint venture between the Indonesian government was engaged in ordert to assembly four-wheeled vehicles. Hence, on February 25, 1969 PT Gaya Motor has been officially established. On July 1, 1969 PT Astra International Incorporation (AII) received official recognition from the government of the Republic of Indonesia as a single agent vehicles motor brand named "Toyota" for the whole of Indonesia. As a continuation of the recognition at the middle of the year 1970, PT Astra International Incorporation (AII) formed "Toyota Division" which handles distributor and marketing area on vehicles of Toyota brand. Considered the market of Toyota was potentially prospected, in 1971 new company named PT Toyota Astra Motor (TAM) was established, in which was a joint venture between Indonesia and Japan, specified as Toyota Motor Company Ltd. and Toyota Sales Company Ltd, whereas from Indonesia was titled as PT Astra International and PT Gaya Motor.

The activities of PT Toyota Astra Motor is import brand cars Toyota in a state Completely knock Down (CKD) from Japan and assemble at PT Gaya Motor, and funnel to the main dealers in Indonesia. In addition, as a single agent, PT Toyota Astra Motor also operates as an importer of spare parts for cars of the Toyota brand. With the development of marketing cars Toyota brand, and so marketing manager for Toyota cars in Indonesia can be more efficient and effective, then on January 1 1976 established PT Astra Motor Sales (AMS) based on the Deed of Notary Kartini Mulayadi, SH. No. 195 dated July 30, 1975 and No. 52 dated October 10, 1975. Previous to sales of Toyota cars made by a division of PT Astra International which Vehichel Motor Division. In 1989 PT Astra Motor Sales join and become a sales division of PT Astra International. The main activity of PT Astra International is selling car brand Toyota, selling shares to the public (go public) with a nominal value of which is not too high. At the time of going public,the name of PT Astra International Toyota Division.

Astra Internasional Logo

On August 8, according to the Deed of Notary Ny. Rukmasanti Harsjasatya, SH No. 2, PT Astra International Toyota Division changed to PT Astra International Toyota Sales Operation

located in Jl. Dr. Djunjunan 192 Bandung. On March 4, 1996 inaugurated PT Astra InternationalToyota Branch Pasteur Bandung by Chief Executive AUTO 2000 Mr. Yap Tjay Soen. Currently, PT Astra International Toyota Sales Operation as sales outlets for the car brand Toyota. PT Astra International Toyota Sales Operation also provides maintenance and repair services through of Toyota vehicles service division and genuine parts through the supply part shop.

I.

Background

In 1971 founded a new company called PT. Toyota Astra Motor (TAM), which is a joint venture between PT. Astra International Incorporation by Toyota Motor Company (TMC). PT. Toyota Astra Motor's activities are importing cars Toyota brand in a state Completely Knock Down (CKD) from Japan, then assembled in PT. Multi Astra and distributing the main dealers in Indonesia. So that the status of the sole agent of Toyota's entire Indonesian transferred to PT. Toyota Astra International Incorporation since it was transformed into the main distribution. In 1973, PT. Astra International Incorporation was appointed as sole agent for the products of Daihatsu, thereby Toyota Astra Motor is not only market vehicles Toyota brand but also vehicles Daihatsu brand. Because the development is rapidly increasing, then on January 1, 1976 established PT. Astra Motor Sales ( AMS) based on Deed Kartini Mulyadi, SH 195 dated July 30, 1975 and 52 on 10 October 1975. Since then PT. Astra Motor Sales became the main distributor of Toyota brand cars and has dozens of branch offices. Furthermore, in March 1990, PT. Astra Motor Sales has sold its shares (go public) to the society, and at the same time PT. Astra Motor Sales is located at Jl. Asia Afrika 125 Bandung changed to PT. All Toyota Divisions. And on February 19, 1991, based on Notarial Deed No. 43 made by Ny. Indirani Soepojo, SH PT. All Toyota Division changed to PT. Astra International Tbk. Toyota Sales Operation Branch Bandung, better known by the name AUTO 2000. This is where the official sale Main Authorized Dealer for Toyota brand vehicles headquartered in Jl. Gaya Motor III 3 Jakarta 14330.

Auto 2000 Logo Brief profile of AUTO 2000 is as follows: 1. Focus on Customer A customer like a king who must always take precedence. Therefore, all efforts are focused to provide value-added services. 2. Reliable Nothing is more valuable than the trust of customers. Not enough experience and expertise are constantly sharpened, but also improvements continually being made to heed the voice of the customer. 3. Green Company Makin high environmental pollution today, inspired AUTO 2000 for always prioritizing the harmony of the environment through the facilities of service procedures, system of waste treatment, as well as the use of products that are environmentally friendly. 4. Team Work Markets are dynamic, just bias anticipated through a synergy of a team involving a variety of skills but has the sole purpose of satisfying customers.

5. Strive for Excellence Once the rapid changes occur, so the high demands of customers push AUTO 2000 to continually improve the service better and better. 6. Ease situation of the growing busy, make time more valuable, that is the source of inspiration AUTO 2000 to provide easy service and provide services such as service booking,Toyota Home Service, OK or Free! Which is easily accessible throughout the branches AUTO 2000.

The vision, mission and objectives PT. Astra International Tbk. Toyota (AUTO 2000) are as follows: 1. VISION Company vision has a huge impact to Indonesia especially in their operation by bringing the international standards to the customers.

"Being the best in the Automotive Dealers Indonesia through the process and the international standard of customer service."

2. MISSION a. b. c. d.

Provide the best service to customers reached a market share number 1 for vehicles Toyota Provide a safe working environment and good for the employees Creating economic value added is positive for shareholders

II. Objectives The main purpose of this study is to examine the strategy conduct and execute by PT , Astra International Tbk, especially in AUTO 2000.

III. Scope of Work / limitation of research Research Scope of Work Limitation of issues intended to limit the scope of the work being done to minimize the problems that exist in the business strategy of PT Astra International (AUTO 2000) Issue limit in this study are as follows: 1. Business strategy conducted by Auto 2000 2. The scope only to the 2000 Auto 3. 2000 Auto CRM

Analysis I.

External Environment

The automotive industries in Indonesia has becoming an important pillar in manufacturing sector for the country, hence, lot of famous automotive industries in the world are competing to reopen their manufacture and increase their production in the country known as the largest population and economic potential in ASEAN. Even more, Indonesia is experiencing on the transition from an export region of automotive production to the largest domestic sales market in conjunction with the increasing of their GDP (Gross Domestic Product). At this moment, Indonesia recorded as the second largest of automotive manufacture in ASEAN (following Thailand). Moreover, seeing that Indonesia’s growth on this section are outstanding in recent years, Indonesia will dominate Thailand’s position in the next decade. In addition, nowadays, the total of capacity on Indonesia’s automotive manufacture is on 2 million units of production per year. According to further research, Indonesian government has a mission to transform the country into the global production center in automotive manufacture and provide the opportunities to automotive’s producer to establish their manufacturers in Indonesia, since the main mission of the program is to replace reinstate Thailand as the leader on the industries upon ASEAN. Furthermore, Thailand controls approximately 43.5% of its market share in ASEAN, following Indonesia with 34%. (n.n, 2016). The team also discovered that there are a relationship between automotive’s sales and the economic growth, while the GDP advance the buying power of Indonesian citizen, simultaneously with the citizen’s confident to own cars. Between 2007 until 2012, the economic growth of Indonesia was growing at least 6% per year. However, in after the year of 2011, Indonesia began to experience the slowdown on its economic growth due to international collapse in which created an impact on the increasing of commodities price, however the demand

on automotive is still high. Hence, the huge number in demand of cars and several competitors leave Auto 2000 to manage and execute their strategic in terms to maintain its good customer relationship management with their loyal consumers. In addition, another factor that could be estimated as the external issue is the government's program in accommodate public transportation, this factor could decreasing the number of sales for cars, and the demand on spare - parts will also decrease too.

II. Industry Analysis 1.1 Porter Five Forces Analysis Based on the analysis of our group, we define the Five Forces of Michael Porter towards the AUTO 2000 at below: Competitive Rivalry Auto 2000 has no direct competitors because its specific only for Toyota Motors Vehicle. In result, the phenomenon creates small competitive rivalry among the industry, considering that the specialization is different between Toyota and other companies. For instance, another authorized auto repair like Honda, Ford, Mazda, et cetera could not accept either Toyota or other cars to be fixed. In addition, the competition between the companies leave the rivalry among the competitor in customer relationship area, the one that provides a good customer relationship and services will win the competition. Furthermore, some aspects in buying the cars is not only driven by models, price and brand awareness but also an outstanding services are needed.

Threat of Substitute Regular workshop or garage provide more affordable price and services. Sometimes the price of spare parts are cheaper and ready to be utilized on the car real time, while on Toyota some of the parts could not be obtained on the same day and needs to be imported first especially, classic cars which has become a trend on the recent years in Indonesia, for instance Toyota Corolla GT Twincam and Toyota Celica SR that produced in the 90’s era. On the other hand in a regular garage or workshop, customers could obtain spare parts at a real time, but of course it is not guaranteed for the authenticity, considering a lot of substitute products have been produced by other spare part’s producer across the nation such as China. In addition, some of regular garage do not determine a fix price on their products, means that the customers could make a bid within the shop owner or the person in charge, different with Auto 2000 in which offer original products made by its manufacturer in Japan, however with higher price compared to the products provided by a regular garage.

Bargaining of Supplier Power Auto 2000 genuine spare parts directly imported from Japan with good quality yet the assembly is done in Indonesia. In our opinion the bargaining of supplier power is high, remembering the dependency of importing the products from Japan. The suppliers play important role and pricing advantage in this phenomenon, suppliers has the position to monopolize its customers, resulting in higher price offered by Auto 2000 to the customers. In addition, when the price charged higher, customers tend to shift from the authorized dealer to regular workshop by cause of cheaper price.

Threat of New Entrant Regular workshop offers a cheaper products’ price to the customers, remembering Auto 2000 still importing its products from Japan, resulting a higher price rather than it substitute products. Regular modification workshop also offer a variant kind of services and ready - stock products in which offered to the customers with fair price. Furthermore, the author also discovered that several modification workshop usually have more skilled mechanic than the authorized repair shop.

Bargaining of Buyer Power The pricing strategy of Auto 2000 could be categorized for middle up customers remembering the price of products are quite expensive, whereas lof of imitation and substitute products are available on the market and possessed a cheaper price than offered by Auto 2000. In addition, it depends on customer's perspective when price do not play as an important role, instead the quality is the one that matter. In conclusion, the bargaining of buyer power is neutral, remembering the perspective and mindset of customers are different to each other.

SWOT Analysis A. Strength (force) 1. Continuous innovation of Astra by developing products to achieve customer satisfaction, for example: Toyota Grand New Veloz is an innovative product from Toyota Avanza 1.5 1500cc. While Creative Products to make new breakthroughs to the market, for example: Toyota Calya which is a product that is expected to penetrate the market share of domestic LCGC. 2. Brand image is very strong among consumers’ mindset, in which Toyota’s brand convince their consumers in regard to the quality offered

3. The prices were reasonable for the class LCGC compared with competitors in the domestic market. 4. With the launch of the product in the market share of Toyota Calya this LCGC, raises value added for Toyota itself. In other words, Toyota providing products of high quality at intervals of prices that can cover almost all segments of the purchasing power of consumers to market LCGC domestic. 5. The implementation of a new distribution approach Just in Time makes Toyota the automotive manufacturers that do not have a warehouse of finished products. This is what makes the advantages of Toyota products cheaper than competitors. 6. Implementation of the strategy 3W: Winning Team to implement Winning Concept with Winning System considered to be very powerful to create a competative advantage of the company. B. Weaknesses 1. The perception gap between the domestic market with the international market of

the product class Toyota Cayla. Toyota's own party claimed that

Toyota Cayla placed on LCGC class. While the class criteria LCGC approximately 150 million down range. 2. The system Indent disappointing consumers. Sometimes the customer cancels the booking process as disappointed would be the promise given by the Toyota dealer. C. Opportunities (Opportunities) The saturation of the automotive consumer domestic to this type of vehicle LCGC, so the model LCGC which will increase the chances of

D. Threat (Threat) 1. Competition is increasingly competitive in the domestic automotive market with innovations in products made by competitors. 2. Bureaucratic system which is considered difficult investment climate in particular automotive systems resulted in the creation of high costs. 3. The interest rate is high in Indonesia 4. Purchasing power in Indonesia is declining.

III. Internal Environment One of the strategies that hook consumers, for customers who have a desire to buy a Toyota vehicle, AUTO 2000 provides services either cash or credit purchases. To his credit, AUTO 2000 in collaboration with members namely leasing Astra Astra Credit Company and Toyota Astra Finance Service provides a credit program that can be tailored to customer needs and requirements. The credit program is supported by Asuransi Astra Buana or Garda Oto. In AUTO, 2000, customers can set their own amount of DP and installments according to his ability. Often AUTO 2000 also offers credit programs which is relating to their sales program created to enable customers in installment As for customers who wish to exchange vehicle lemanya with new vehicle Toyota, AUTO 2000 in cooperation with the car 88 provides the ease with services Trade In (trade-ins ). Car 88 will perform appraisal (calculating the price of the vehicle) and provide competitive prices for the customer so that the customer not bother anymore to sell the vehicle. PT Astra International Tbk ambitious to maintain its position as market leader in the national motorcycle market and reap a 56% share in domestic auto sales, despite fiercer competition atmosphere. President Director of PT Astra International Prijono Sugiarto said in line with national economic growth is good throughout the first 3 months of this year, consumer

demand for automotive products is quite high. This year, Astra projecting domestic car market volume of about 600,000 units and total car sales of two-wheeled vehicles to penetrate the 6.7 million-6.8 million units of motorcycles. The market growth is believed to be achieved, assuming no increase in rates of motor vehicle tax. (bisnis.com, Tuesday, May 18, 2010) In the face of free trade Asean Free Trade Area (AFTA) were introduced on January 1, 2010, AUTO 2000 has several strategies, among others: 1. Strengthening the network or services by adding an extensive distribution network. 2. Strengthen after sales service

Aside from the workshops, also conducted reminder for customers, reminding about what time they serve, to follow up after customers complete service, provides an additional discount for customers who make bookings, discounts for members AstraWorld card, provide a service plus free (such as filling water batteries, radiators, car washes, etc.), provides a lounge area with various facilities (the room comfortable and complete, free food and drinks and even lunch are also free of charge, the service free massage chairs, etc.) Some branch AUTO 2000 also implementing CRM strategies (Customer Relationship Management), namely: 1. Follow up 1 is the approach followed by the phone to customers who wish to purchase in the

showroom. 2. If there has been a purchase of a car, then three days after the delivery of customer cars will be contacted by telephone by the Auto 2000 TSO kertajaya, to inquire and to reconfirm whether the car has been up to the customer and the condition of the vehicle either. 3. Follow-up 2 is reminding customers to service the first treatment that is done one month after the car is sent to the customer or the car has reached 1000 km.and these activities will be to the periodic service 5000km, 10000km, 20000km , and so on.

4. Follow-up 3 that the activities carried out over the phone to customers who have made service a

car in 2000 Auto TSO kertajaya to ensure that the vehicle has been in service three days ago has been returned in good condition, if there are problems on the vehicle then customers can get back to the garage for repairs. Main dealer Toyota in 2011 offers 12 convenience for customers through a strategy titled Life is Easy with Auto2000. "With the new strategy, we continue to make improvements in order to enhance the satisfaction and loyalty of the consumer," said Jodjana J Chief Executive Auto2000. Customer satisfaction is the main mission that carried Auto2000 this year. In the middle of the inflation rate and the increase in the vehicle due to tax regulations, the main dealer of Toyota in Indonesia was trying to increase customer satisfaction. Last year Auto2000 achieve the highest sales record of 220 280 units and won the first position JD Power customer satisfaction survey. Therefore, Auto200 offers 12 reasons why consumers would be easier to use a Toyota.

Conclusion and Recommendation

Strategy PT Astra International Tbk. (Toyota Auto 2000): 1. By way of strengthening the network or services by adding an extensive distribution network. 2. Strengthen after sales services Determining the limits of business / business to be conducted

3. 4. 5. 6.

Provide the best service to customers Achieving the number one market share for the Toyota vehicle Providing a safe working environment and good for the employees Creating a positive economic value for shareholders

Tactics Strategy PT Astra International Tbk. (Toyota Auto 2000):

Helps the process of identifying, selecting priorities and exploitation opportunities Provide a framework for improving the coordination and control of Direct and shaping corporate culture Maintaining consistent policies and appropriate Integrating the behavior of individuals into collective behavior Minimizing implications due to the changing conditions Creating a framework for internal communication 8. Providing management discipline formalities adan 1. 2. 3. 4. 5. 6. 7.

From strategies and tactics implementation that I took from the case of the equation and the difference is: The equation is: Same - are aiming to achieve the vision and mission that has been designed in a way using strategy have been defined by the top management and the already divided assigned to the line manager or have been granted tactics - tactics that exist to achieve these strategies so that managers can implement strategies that aims to achieve the vision and mission of the company to the maximum. The difference: a.

Strategies in PT Astra International Tbk (Toyota Auto 2000) was a top management there

gives planners an idea or arrangements to achieve the goal or the vision and mission of a company .in other words, a top manager was looking for what should be planned to achieve its vision and mission. b. Tactics in PT Astra International Tbk (Toyota Auto 2000) How can the success of the strategy that has been made and in so tack more towards its implementation so that it can achieve the objective of a Company

References ● ● ● ● ● ●

Thompson, (2016), Crafting & Executing Strategy; The Quest for Competitive advantage, twentieth edition, McGraw-Hill International Edition. https://www.astra.co.id/Public/files/Annual%20Report/annual_report_astra_2014.pdf http://www.toyota.astra.co.id/product/calya/ https://auto2000.co.id/ http://www.toyota.astra.co.id/product/avanza/ https://www.astra.co.id/About-Astra/Philosophy-Vision-Mission