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Email: chinafertilizermachine@gmail.com
To produce organic fertilizers is the best choice for sustainable development of palm oil wastes disposal in Southeast Asia, which includes empty fruit bunch, palm oil sludge and palm fronds.
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• 3rd largest armed forces in the world.
• 40% of budget spent on capital acquisitions.
• 60% of requirements met by imports.
• INR 250 Billion to be invested in 7-8 years.
Reasons to Invest
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• Opportunities to avail defence offset obligations to the tune of approximately INR 250 Billion during the next 7-8 years.
• The offset policy (which stipulates the mandatory offset requirement of a minimum 30% for procurement of defence equipment in excess of INR 3 Billion) introduced in the capital purchase agreements with foreign defence players would ensure that an eco-system of suppliers is built domestically.
• The government policy of promoting self-reliance, indigenization, technology upgradation and achieving economies of scale and developing capabilities for exports in the defence sector.
• The country’s extensive modernization plans, an increased focus on homeland security and India’s growing attractiveness as a defence sourcing hub.
• High government allocation for defence expenditure.
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Automobile industry is a symbol of technical marvel by human kind. Being one of the fastest growing sectors in the world its dynamic growth phases are explained by nature of competition, product life cycle and consumer demand. Today, the global automobile industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. The industry is at the crossroads with global mergers and relocation of production centers to emerging developing economies.
Asia has become the major consumer as well as supplier of automobiles. India is concentrating on Middle East and south Asia beside traditional developed country destinations. With the gradual opening up of the component sector, now the challenge is for individual governments to support the development of domestic critical component and sub-system suppliers through, improvement in the investment environment, stronger patent regimes and incentives for R&D.
Website: www.fertilizer-machine.net
Email: chinafertilizermachine@gmail.com
To produce organic fertilizers is the best choice for sustainable development of palm oil wastes disposal in Southeast Asia, which includes empty fruit bunch, palm oil sludge and palm fronds.
Summary
• 3rd largest armed forces in the world.
• 40% of budget spent on capital acquisitions.
• 60% of requirements met by imports.
• INR 250 Billion to be invested in 7-8 years.
Reasons to Invest
• India’s current requirements on defence are catered largely by imports. The opening of the strategic defence sector for private sector participation will help foreign original equipment manufacturers to enter into strategic partnerships with Indian companies and leverage the domestic markets and also aim at global business. Besides helping build domestic capabilities, this will bolster exports in the long term.
• Opportunities to avail defence offset obligations to the tune of approximately INR 250 Billion during the next 7-8 years.
• The offset policy (which stipulates the mandatory offset requirement of a minimum 30% for procurement of defence equipment in excess of INR 3 Billion) introduced in the capital purchase agreements with foreign defence players would ensure that an eco-system of suppliers is built domestically.
• The government policy of promoting self-reliance, indigenization, technology upgradation and achieving economies of scale and developing capabilities for exports in the defence sector.
• The country’s extensive modernization plans, an increased focus on homeland security and India’s growing attractiveness as a defence sourcing hub.
• High government allocation for defence expenditure.
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favoring the growth of the market is the increasing use of decorative and aesthetically pleasing tiles in
numerous residential and commercial buildings, with uses including flooring, wall coverings, countertops, and
among other applications
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
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https://unctad.org/en/Docs/ditccom20081_en.pdf
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IDENTIFICATION OF KEY SUCCESS FACTORS OF STRATEGIES IN ENTERING THE INDIAN MARKET FOR EDIBLE PALM OIL PRODUCTS FROM INDONESIA.
1. 1
IDENTIFICATION OF KEY SUCCESS FACTORS OF
STRATEGIES IN ENTERING THE INDIAN MARKET FOR EDIBLE PALM OIL
PRODUCTS FROM INDONESIA USING PEST ANALYSIS
Thesis
Untuk memenuhi persyaratan
Mencapai derajat Sarjana S - 2
Submitted By :
Ira Kristina Lumbantobing, SP
10/325335/pek/15945
MASTER OF MANAGEMENT PROGRAM
FACULTY OF ECONOMICS AND BUSINESS
UNIVERSITAS GADJAH MADA
2014
2.
3. 3
TABLE OF CONTENTS
Title Page 1
Approval Page 2
Table of Contents 3
Abstract 4
Chapter 1. Introduction 5
Chapter 2.Literature Review 7
Chapter 3. Research Methods 9
Chapter 4. Results and Discussion 10
Chapter 5. Conclusions and Recommendations 14
References 16
4. 4
ABSTRACT
Indonesia's palm edible oil production is marketed to the domestic market
or consumed by the international consumers throughout the world including the
Indian market. To be able to execute a strategy to enter the Indian market,
Indonesian palm edible oil producers that have export potential should have the
right information about the Indian market to take advantage of opportunities palm
oil exports to the Indian market.
The primary objective of this study is to provide a clear picture of the
opportunities and challenges that will be faced in the Indian market by each palm
edible oil producers that have the potential to enter the Indian market by
exporting. After describing the Indian market, strategic recomendations to enter
the Indian market will be provided.
The results show that the Indian market is increasingly open for palm
edible oil products from Indonesia, but each potential producer must first establish
cooperation (networking) with a local company. So supporting factors such as
communication lines, distribution channels and marketing resources can support a
strategy to enter the Indian market.
Keywords: PEST analysis, market entry strategies, export, joint venture, key
success factor, supply chain, value chain, strategic alliances, partnerships,
edible oil.
5. 5
CHAPTER I
INTRODUCTION
1.1 Background
Based on the amount of data obtained, both the needs of cooking oil in the
international markets such as China, India, and the EU as well as in the domestic
market is filled by Indonesian edible palm oil production. But the European Union
countries have been importing palm oil for biodiesel production. For the needs of
the food industry, people of EU consume more sunflower oil and soybean oil.
Market opportunities for edible palm oil derived from Indonesian palm oil
in India is driven by an increasing consumption of edible palm oil as the
population grows. By considering the growth of the Indian economy and the ever
increasing population growth of India in the next year, it is certain that the people
of India’s edible palm oil consumption will increase
To be able to execute a strategy to enter the Indian market, Indonesian
edible palm oil producers that have export potential should have the right
information about the Indian market to take advantage of edible palm oil export
opportunities to the Indian market (Sinaga, 2012).
Characteristics of edible palm oil consumption pattern of the Indian
community is the variation option (request) to the existing types of edible oils, due
to variations in food culture of Indian society. Variations in the volume of demand
for each type of edible oil consumed by India led to different target markets,
which depends on the area where the edible palm oil are consumed. India is a vast
country with a population that is spread across several provinces in the country
that has a very varied preferences for types of edible oil which is largely
dependent on consumer tastes, culture and availability of products related to
edible oil in the region.
India also has oil palm plantations that also produce palm oil for local
consumption. The oil palm plantations has increased during this production
(USDA, 2013). The increase in the production of local Indian plantation is not in
6. 6
harmony with the consumption increase as the projected growth of the population
of India has not been able to meet the domestic needs of the people including
edible palm oil.
As a country with diverse consumption habits for edible palm oil products
ofIndia has a specific consumer behavior for cooking oil (edible oil) which
depends on the area where the largest buyers are consumers who are used to select
edible oil made from palm oil and depends on availability of edible oil products
derived from palm oil in the area concerned. While some parts of India like
Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and Andaman and Nicobar
Islands also produce local palm oil (USDA, 2013). Therefore, information is
needed by the Indonesian palm oil industry to take advantage of the opportunities
in the Indian market.
Because each country has specific characteristics and distinctive market for
any of the Indonesian industrial products, it is necessary to facilitate the Indian
market information for palm oil producers in Indonesia, with the potential to enter
the edible oil market in India. This information concerns the external aspect in the
Indian market. External factors, among others, in addition to knowing the political
or government policy factors affecting the market, economic conditions of Indian
society in general and consumers, social factors and technological factors
affecting the edible oil market in India are also required. Besides, it also includes
the market information that includes both the competitors from Indonesia, as well
as from other producers and manufacturers of substitute products in the Indian
market and in order to have a market entry strategy (market entry) located in the
Indian market.
Based on the background that has been prepared for this study, the problem
is then formulated for palm oil companies that have the potential to export to India
to get an overview of the political, social, economic and technological factors in
the Indian market, especially in the face of the magnitude of consumer demand
and the diversity of Indian society as well as the challenges to be faced to have a
good performance in India. Besides, supporting factors should also be noted as to
7. 7
what should be owned by companies of palm oil producers to be able to enter the
Indian market.
1.2 Purpose and Objectives
The primary objective of this study is to provide a clear identification of the
opportunities and challenges that will be faced in the Indian market by each palm
oil producers that have the potential to enter the Indian market by exporting and
providing strategic advice to be successful. The focus is on exploiting the
capabilities and opportunities to face the challenges in the Indian market in order
to succeed and minimize weaknesses that might be owned by Indonesian palm oil
producers when entering the Indian market. In addition, this paper aims to
investigate whether the efficiency of the resources used can be improved further.
Strategic advice and opportunities for improvement are intended to be useful also
for Indonesian palm oil industry, especially for Indonesian palm oil producers that
have the potential to penetrate into the Indian market.
CHAPTER II
LITERATURE REVIEW
Any company or organization that is engaged in the business sector should
perform an analysis to understand the market before deciding to enter the market.
The focus is to understand the market understanding of consumer / buyer and
buyer behavior (Kotler, 1997).
Market segmentation is the basis for market analysis. Market segmentation
or clustering is a method of distinguishing market (differentiation) for the
behavior of the consumer market based on the location of the market area
(geographic segmentation), based on demographic variables (demographic
segmentation), based on social class or group lifestyle (psychographic
segmentation) and based on the use of consumer or lifestyle (behavioral
segmentation).
Geographic market segmentation starts from selecting the right location
for any business plan of each company to determine the success of the company
8. 8
concerned. Market site selection decision is not only significantly important in
starting a business but also in order to expand the market of a company's products.
Taking into account the great influence of the selection of the location of the
market, then it is important to analyze the macro environment of the relevant
market (Thommen and Achleitner, 2003). Macro market environment is defined
as a part of the global environment consisting of various business actors and
strength that becomes the external environment related to companies that should
be considered a company's business decisions. Global movement in terms of
culture, lifestyle, demographics, politics, international law, economics and politics
has the ability to support or become an obstacle to the country, industry or
organization in achieving its objectives. Global companies typically have a macro
environment of more than 1 (one) state. Each state has varying macro-
environmental variation and different from other macro environment affecting the
industry and the market situation.
Austin (1990) adds four macro factors influential to the original
framework of Porter's five forces. These four factors include economic, political
factors, cultural and demographic. These factors are similar to the factors in Pestel
- framework (political, economic, social, technological, ecological and legal)
developed by Johnson et al. (2008). Analysis of the macro is used to scan the
macro environment, which considers political or legal environment, economic
environment, social culture environment or, environment technology, and
ecological or physical environment. Important forces that together make up the
opportunities and threats to companies in its industry. (Jobber, 2004).
Furthermore, Johnson et al (2008) noted that the SWOT analysis (Strengths,
Weaknesses, Opportunities, Threat) is a useful tool to generate strategic options
and assess the company's future course of action. SWOT analysis is a technique
that is credited to Albert Humphrey (1969). It is a transparent planning instrument
that can identify problem areas that are important to a company. It also allows the
company to learn about the current situation and reflect on what can be done to
improve the current situation (Sorensen, Vidal, and Engström, 2004).
9. 9
After analyzing the external and internal environment, companies can
determine the competitive strategy to be used to achieve competitive goals.
Competitive strategies can be used to exploit opportunities in the corporate
environment with the company strength, and neutralize threats in the enterprise
environment while avoiding the weaknesses of the firm (Barney, 2007).
PESTEL or frequently PEST is used because some researchers suggest
that ecological and political elements of the law are included, rarely applied alone,
because the information provided is temporary and is more useful to complement
other analysis. Combined with SWOT, for example, PEST helps to understand the
risks associated with the launch of certain products to the market (Schildhouse,
2006).
According to Kumar (2008), India is a strategic area as a country with a
majority population who can speak English, low business operating costs because
it is supported by the Indian government's policy and has a growing market
potential.
Key Success Factor of some foreign companies in India are owned by,
among others, (1) the right information over the local business partner who knows
for sure about the target market and bureaucratic and procedural problems of
existing business, (2) The results of the study provide information powerful on the
market and competition, (4) Planning good operations, (5) The active due
diligence and follow-up that follows, (6) Patience and commitment, (7) the
existence of competent counsel, and (8) a clear understanding of the above rules,
standards and regulations applicable by the Indian government.
CHAPTER III
RESEARCH METHODS
Based on the results or facts obtained, the study is included as a desk study
(study based on historical data). This study uses literature review (desk study),
which is a systematic way of identifying problems, collect data, analyze
information, and draw conclusions and make recommendations. From the
literature, researcher can sharpen understanding of what is faced by any producer
10. 10
of palm oil from Indonesia if they want to enter a new market namely the Indian
market, precisely formulated with a comprehensive analysis for the challenges
and demands of the global market, especially the Indian market.
In preparing this research, the stages are divided into 4 (four) stages,
starting with the preparation phase that began in early January 2013 with a look at
the opportunities and make observations on the Indian market which will be used
as case study, conduct a literature study followed by stages of data gathering. This
stage is done by compiling a list of data of export of Indonesian palm oil products
to the worldwide import and export data from multiple producers and consumers
of palm oil in the world through the study of documents and case studies where
historical data are related to the research objectives. The method of data collection
was done by Library Studies, Documentation, and observations. The data was
then validated by conducting unstructured interviews with relevant resource
persons (key person) with reference to the secondary data that has been analyzed
with the PEST analysis that has been collected. Interview results were analyzed
and interpreted by using the SWOT matrix.
CHAPTER IV
RESULTS AND DISCUSSION
This chapter describes the results of the analysis in accordance with the
formulation of the problem and research objectives. In this chapter, discussions
regarding market analysis conducted on the external environment faced by the
palm oil industry Indonesia in the Indian market by using internal data processing
and other related data over the Internet and government institutions, companies
and associations of export company.
Table 4.1.
Results of Political Factors in India
Political Factors in India Impact on Market Entry Strategy in India
1. Indonesian government
policy to prohibit
shipments to the rest of the
An opportunity as it is advantageous to transmit
processed palm oil products in the form of cooking oil
into the Indian market in terms of export taxation
11. 11
world including India (tariffs).
2. Increase in tax for crude
palm oil and refined oil
imports.
Basis of preparation of the product strategy of the
company to be delivered to the Indian market in the
form of CPO or refined oil that has been given and
branded packaging or in bulk form with consideration
of the value added generated in the form of
cooperation with Indian companies.
3. Regulation by
Government of India on
cooperation (partnerships)
for the strategy to enter the
Indian market.
Basis of joint venture co-operation agreement, imports
into India could be in the form of palm oil products
will be packaged and brand will be more easily
recognized in the Indian market.
4. Packaging Regulation
Order on 17 September
1998
Basis of preparation of the company's product strategy
for packaging products that are required for products
sold in the Indian market.
5. Environmental Law Communicating environmental care measures for both
carbon print calculation results or RSPO certification
information done on consumers through promotion or
through product packaging.
Table 4.2.
Results of Economical Factors in India
Economical Factors in
India
Impact on Market Entry Strategy in India
1. The fifth largest
consumer market
Offer a market opportunity that must be addressed
2. Purchasing Power Parity
Indian society is rising.
More comprehensive market study for the area
other than South India and East India
3. Consumer brand loyalty
for oil of the people of
India that is low.
Palm oil producers can cooperate with local Indian
companies for the right marketing strategy when
entering the Indian market.
4. Consumer behavior
palm oil in India.
Market segmentation and targeting delivery time
along with the Indonesian palm oil.
5. Number of large Indian
population
Market potential as well the availability of human
resources for each type of corporate strategy to be
executed.
Table 4.3.
Results of Social Factors in India
Social Factors in India Impact on Market Entry Strategy in India
1. Population growth rate reached
1.41%.
Basis of preparation of a strategy to enter the Indian
market, especially the determination of the target
market and geographic segmentation. Placement of
12. 12
human resources at the same time based on market.
2 Differences in consumption
patterns for each area.
Supporting factor is that both the packaging and the
product can be enriched by having a business
partner that has Indian market information.
3. Increased public awareness of
health in India who thus prefer to
have a more healthy lifestyle by
consuming palm oil
Product strategy with vitamin A fortification and
use packaging that contain health information.
Packaging products with brand logos and
international or local brands of Indian local
business partners should include ingredients with
tables using English or the local language.
4. Existence of Indian domestic
edible oil production that affects
the rate and schedule of the Indian
edible oil import demand
The entry of palm oil products from Indonesia is
scheduled to consider the domestic edible oil
production time.
5. Culture of Indian people who
consume palm oil in liquid form.
Right product strategy for the Indian market is in
liquid form.
6. Difference between Consumer
Behavior of India.
Required strong value chain and understand
consumer behavior in the Indian market through a
network of export marketing, or distribution
networks for products that can be obtained from the
joint venture (strategic alliances) between the
Indonesian palm oil producers with local
companies.
7. Existence of the need for
knowledge of distribution channels
for palm oil in Indian market.
Cooperate (Strategy Alliances) with Indian
companies that play in the Indian market.
Table 4.4.
Results of Technological Factors in India
Technological Factors in India Impact on Market Entry Strategy in India
1. Technologies of edible oil
production is supported by the
Indian government with TMOP
program.
- The technology is supported by the government,
local competitors and substitute products have more
competitive prices,
- This means it will be more profitable if the
delivery is not in the form of crude palm oil (CPO)
but already in palm oil.
2. Availability of Access to
Information of edible oil market
players in India in cyberspace (the
internet).
- - Manufacturer of Indonesian palm oil which is
trying to break into the Indian market to
formulate its market entry strategies taking into
account competitors and business partners in the
Indian market
3. Strong information technology
systems that exist in the Indian
market
- Facilitate planning and market entry strategy
through a corporate survey and more
comprehensive assessment.
13. 13
After conducting an analysis of external factors faced by Indonesian palm
oil in the Indian market, it was found that the factors supporting the success of a
strategy to enter the Indian market (Appendix 4), among others, are:
1. Cooperation with local Indian companies, especially for the packaging and
distribution problems;
2. Strengths of the upstream value chain, especially in the downstream sector, to
collaborate with Indian companies;
3. Concern for the environment is communicated to the market as part of a
strategy to enter the Indian market;
4. Behavioral information distribution channels to market and the target market is
supported by cooperation with local companies.
5. HR marketing strategy to help enter India.
6. Healthcare information products published to the consumers
7. Strong communications with the Indian market
8. Information technology systems.
Analysis of contributing factors is inferred from the opinions of experts
(expert judgment) that relate directly to the business of the Indonesian palm oil
and palm oil in Indonesian exports to the Indian market that focuses on strength
and contributing factors that must be owned by Indonesian palm oil producers
with the potential to have a strategic market share in the Indian market as well as
weaknesses that must be addressed by the company.
Success Factors of Palm Oil products from Indonesia in the Indian Market
IFAS and EFAS TABLE
Supporting Strategic Factors Weight Rating
Weight
x
Rating
Opinion source
Internal Strategic Factors
The strong network of value chain of products 25% 3 0.75
Stanley, Supervisor
pemasaran Permata
Hijau Group
Strong distribution system in the export market (the need
for knowledge of food distribution lines of palm oil in the
Indian market)
25% 4 1.0
Full support facilities along the value chain 10% 5 0.5
Robust human resources 10% 2 0.2 Sahat Sinaga, Direktur
Eksekutif GIMNICaring for the environment 25% 4 1.0
14. 14
Interest for expansion into the Indian market 5% 4 0.2 Inge Indrawati, HRD
Manager Area II SIMP,
Sahat Sinaga, Direktur
Eksekutif GIMNI
Complete information about the Indian market
20% 4 0.8
TOTAL 1 4.45
External Strategic Factors
Growth potential of the Indian market over Indonesian
palm oil (USDA, 2013) 30% 4 1.2
Sahat Sinaga, Direktur
Eksekutif GIMNI
Networking with local Indian company (Partnership with
Indian companies). 50% 5 2.5
Stanley, Supervisor
pemasaran Permata
Hijau Group
Lines of communication with India should be there.
10% 5 1.5
Stanley, Supervisor
Permata Hijau Group
TOTAL 1 5.20
CHAPTER V
CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion
After analyzing the macro conditions given the large Indian market with
palm oil market opportunities in India, as well as perform validation with several
representatives from companies who know about the marketing of refined palm
oil products to India, then some internal and external factors are outlined that
should be available to support the implementation of the strategy to enter the
Indian market, among others:
1. Negotiation or business agreement with the business partner in Indian market
which is nuilt by strong networking along the supply chain of palm oil products,
existence of lines of communication with the Indian market, networks and value
chains strong distribution system and full support along the value chain;
4. Concern for the environment;
5. Completeness of information on Indian market as well as
6. Human Resources Marketing.
5.2 Recommendations
Some suggestions are recommended to all parties concerned an increase in
palm oil exports to the Indian market are:
15. 15
- It is advisable for companies that have the potential of palm oil exports to India
began to form teams that perform market intelligence survey of potential business
partners, either by using the information from the list of edible oil manufacturer in
the Indian market which is attached (Appendix 2) or through participation in
business matching event organized every year by the Indonesian government
through the Chamber of Commerce and by the Indian government.
- In addition, the Indonesian palm oil producers that have the potential to expand
into the Indian market is recommended to conduct a more comprehensive survey
of the market, including the need for information distribution channels that can be
used to meet the needs of the Indian market to start doing business
communication and contact with market participants (Appendix 2) suitable with
the criteria required by each partner company of Indonesian palm oil producers
that have the potential and plans to penetrate the Indian market;
- The need for support from the Indonesian government in supporting the
development of cooking oil industry, especially in the regulation of the marketing
and export to the Indian market. Other tasks include the role of the government to
safeguard the world of Indonesian palm oil industry to penetrate the Indian
market;
- For further research, it is recommended to examine completely and detailed to
the penetration strategy or evaluating the benefits that can be achieved if a
strategy as suggested by the author is taken for several Indonesian companies and
Indian markets (case study).
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