Case Study Macoeconomics Kelompok 7 kelas LN21 Karina Tjandra - 2201833026 Ardillah Umar - 2201743043 Sheiren Setiadi - 2201810073 Richard Susanto - 2201831626 Mahanara Pradya - 2201826090

1. AGGREGATE SUPPLY
& DEMAND
Ardillah Umar/2201743043
Sheiren Setiadi/2201810073
Karina Tjandra/2201833026
Richard Susanto/2201831626
Mahanara Pradya/2201826090
1

2. Agenda
2
 Executive summary
 Brief history
 Industry analysis
 Company analysis
 Alternatives
 Recommendation

3. Executive Summary
3
When beef is on high demand, the price will rise with the
same amount of stock. We proposed to either decrease
the price, request the policy maker to set maximum
quantity bought with discount, or lower quantity of beef on
society so that they will use subtitutions.
from our small research, at 2017 through 2019 beef price
level has been stable; Rp.120.000 per kilogram but per
year at peak season it was sold with different prices. to
prevent beef price ceiling, the economic watcher(?) bought
imported meat to cover the demanded amount. when the
price lowers and quantity demanded reaches equilibrium
point, the market will have more revenue because their
production cost was lowered. it meets maximum revenue
for merchants and satisfaction for buyers.

4. BRIEF HISTORY4

5. Business Key Points
5
 Normal price of meat in Indonesian market is Rp.120.000
per kilogram and it has been stable since the end of 2017.
 At 2019 Eid Mubarak, its price rises to
Rp.130.000~140.000 per kilogram because of high
demand and still stock of livestock.
 The government has set the highest retail price HRP and
the lowest retail price LRP to prevent excessive mark up
and to prevent a seller to monopolistically run a market
with lower than average price

6. Key Challenge
6
High price of beef is usually caused by
production cost, which when the prices rise then
the supply will rise.
Price is determined by buyer power and demand
from market.
The last factor is the existance of commodity
competitors market.
Overall it is composed by existing mechanism
that bows to the terms of aggregate supply and
demand.

7. Key challenge
7
 Many competitors created a perfect competition
market, which means prices set by each seller
can not be diverse. However, the price set for
imported goods (beef) can differ significantly from
local cattle.
 For this year and 2018, prices of beef is relatively
stable even at peak season. It is very different
from the year 2016 where the price can go up to
Rp.150.000~160.000. Normally the price only
advance to Rp.140.000.
 The meat industry is widely known for subtitutes,
such as chicken, lamb, buffalo, and duck.

8. INDUSTRY ANALYSIS8

9. Highlight of Beef Industry
9
 Beef cuts are prone to rise in price when it is near
holiday season. It changed because of high demand and
limited supply of local livestocks prefered by buyers.
 When beef were on high season 2017, the price rise up
to 25 percent from average price Rp.120.000 to
Rp.150.000. Through this rising prices, the stock limits;
government made policies to balance it out with
imported meat and supplying beef subtitute. Only after,
the price can slowly decline to normal after the season
ends.

10. Challenges of the industry through
PEST Analysis
10
 Political Analysis
The government set limits of prices and in a way,
limits selling of product.
 Economical Analysis
Losing some buyers because of high prices and
limited budget.
 Social Analysis
The world is conquered by people who know the
differences and similiarity of products.
 Technological Analysis
Farmers need to sped up the hygienic process of
butchering to meet the demand per peak season.

11. Macro-Environmental Analysis
11
Porter’s five forces
COMPETITION
(medium overlap)
Imported beef from
neighboring countries
and online markets.
SUBSTITUTION (medium)
Lamb, chicken, duck, and pork.
BUYER POWER (high)
Household buyers are
sensitive to switching
prices and prefer
cheaper price with
similiar quality.
SUPPLIER POWER
(high)
Total cost is
dependant on the
price given by
supplier.
NEW ENTRANTS (high)
They are quick to join the
market and sell the product
with same price.

12. Financial Performance
12
Both graph shows relatively
rising prices in international
goods as well as local goods.
When the aggregate demand
(AD) price in 2019 rise
steadily like the end of 2018,
the real GDP in 2019 would
increase but quantity sold
would decrease. On one side
it would be an effective
spending for the community
but it would be not fair since
then beef would be
considered luxury and not
commodity.

13. Financial Performance
13
For Kramat Jati market, beef price rise for a normal
period unlike Sunter Podomoro market where the price
level experience two dipping price points.
Figure 2. Local Beef Price Level per 25 May – 14 June 2019

14. COMPANY ANALYSIS14

15. 15
The beef market in traditional markets are capable of
meeting the demand of beef in general, since they stock
up on beef supply from farmers. However, the price varies
from season to season. The largest spike in price usually
happens during Ramadhan.

16. Key Success Factors
16
Customer Wants Competition provides Key Success factors
Fresh beef Alternatives in beef Indonesian food that
relies on the use of beef
Local meat Import beef Most Indonesians
believe that local beef is
fresher and tastes better
Slightly flexible in pricing Fixed Prices
(supermarkets,traditional
markets,and others)
Customers can bargain
for the price of beef with
merchants
Transperancy in
preparing the beef
Pre-cut beefs Merchants tend to
butcher the beef in front
of customers, hence of
can judge the freshness
and the condition of the
beef themselves

17. Value Chain of Beef Market
17
0
20
40
60
80
100
120
140
160
2015 2016 2017 2018 2019
Price(InThousandsofRupiahperKilogram)
Year
Price of Beef
Normal Price That Year Pre-Ramadhan

18. ALTERNATIVES (OPTIONS)18

19. Key Issues / Decision Criteria
19
1. As Kramat jati market is the cheapest market, a sudden
increase in price will make them look like they increase
drastically.
2. There are way too many markets that sell higher quality
and fresher meat than Kramat Jati ma

20. Option #1:Decrease the price of
meat20
Pros
 High Demand
 Increase in consumption
Cons
 Meat quality is not guaranteed
 Minimum profit

21. Option #2: Decrease the price of meat
and set a maximum quantity for each
buyers21
Pros
 The stock decreases gradually
Cons
 Meat quality is not guaranteed
 Both buyers and sellers from above action
 Minimum profit for seller

22. Option #3: decrease meat stocks
with the same prices and quality22
Pros
 High demand
 Control of market so
 Local beef
Cons
 The price will still high
 Buyers will buy import beef which way more cheaper than
local beef
 the market did will be selling meat at still expensive prices but
at the risk of it not being the only product highly on demand.

23. Key Issues and Related
Solutions23
Key issue
/decision
criteria #1
Key issue
/decision
criteria #2
Key issue
/decision
criteria #3
Key issue
/decision
criteria #4
Timing in Market
Entry Key issue
/decision criteria
#5
Option #1:
decrease the
price of meat ✓ ✓
Option #2: set
maximum
quantity for each
buyers
✓ ✓
Option #3:
decrease meat
stocks with the
same prices and
✓ ✓ ✓ ✓
A chart with checkmarks shows at-a-glace which option
best solves the key issues / decision criteria.

24. Recommendation
24
Option #3 by decreasing the meat stocks with the same
prices and quality address all of the key issues that
Traditional markets facing, needing to have higher chance
of profitiability, and the last option that we recommend is
the best to solve the issues.