AN INVESTMENT ANALYSIS FOR BUSINESS DIVERSIFICATION STRATEGY IN PT. BPK

• Main Author: Rismanto
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/41484
• Institution: Institut Teknologi Bandung

PT. BPK is a family-run business that is engaged in contractor and supplier for the oil and gas industry is facing stiff competition from existing and new competitors. Currently, the company only focuses on small to medium scale projects. Given the condition aforementioned, the company is feared that it will lose income in the years ahead if only relies on the existing business. This research is going to find a strategy that the company can take to increase more income and make the company a going concern. In this research, the author will use the approach of Grand Matrix Strategy to find the best strategy the company can take in the future. The first step is analyzing the industry using PEST, Porter Five Force, and competitor analysis. In the meantime, the internal condition of the company is analyzed using VRIO and value chain analysis. Industry and internal analysis then summarized into SWOT and TOWS analyses. Based on these analyses, then constructed into IFAS and EFAS matrix. As a result, found that the company still has a competitive position in small to medium projects. However, the company also faces limitedness of project number and strong competition from existing and new competitors. The analysis has concluded into diversification strategy as the main option to make the company as a going concern. PT. BPK is now eyeing on a new project of coal transportation. The project is predicted to give a guarantee of long term income. Investment analysis has shown that the new project is feasible. NPV for the project amounted to IDR 2,714,567,880 with IRR stands around 31.81% or far above the hurdle rate of WACC at 22.44%. The payback period from the project is estimated into 1.84 years or less than the period of the project of 3 years. Last but not least, the profitability index the company can get from the project is 1.15x or above parameter standard at 1.0x. NPV for the equity amounted to IDR 703,536,207 with IRR stands around 58.76% or far above the hurdle rate of the cost of equity at 46.21%. The payback period for the equity is estimated circa 1.56 years or less than the period of the project of 3 years. Last but not least, the profitability index the company can get from placing its equity is 1.19x or above parameter standard at 1.0x.