PROPOSED BUSINESS STRATEGY FOR PALM OIL PLANTATION: CASE STUDY OF PT. XYZ

• Main Author: Nathania Sirait, Claresta
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/43416
• Institution: Institut Teknologi Bandung

In recent years, palm oil industry in Indonesia has experienced turmoil mostly due to external factors in global and domestic context. PT. XYZ is a private palm oil plantation company that produces fresh fruit bunches that are sold to palm oil mills. The firm has suffered from declining margin rate that can potentially threaten its sustainable profitability. In order to find prospective solutions, this study conducts analysis on internal and external environment. The external environment analysis consists of PESTLE Analysis, Porter’s Five Forces, and Competitor Analysis. The external analysis finds that highly competitive vegetable oil market, weakening demand for palm oil, escalating trade barriers on import, along with surging domestic palm oil production lead to the declining crude palm oil (CPO) in Indonesia. Additionally, in recent years, several new strict regulations imposed by Indonesian government on domestic palm oil industry can potentially restrain future development and expansion. Internal environmental analysis consists of Resources-based View Analysis that composed of examining resources, capabilities, core competencies, value chain analysis, and competitive advantage. The internal analysis finds that PT. XYZ has competencies in having sufficient number of skilled and experienced field workers, and strong collaboration between Research & Development and field workers. These competencies are appraised as competitive parity and temporary competitive advantage effect respectively. In addition to competencies, operations in PT. XYZ are still considered inefficient and have several weaknesses. Based on these factors, this study conducts SWOT Analysis and Internal External Matrix to formulate external and internal strategies, that are derived into business and functional level and further into implementation plan. In conclusion, this study proposes business strategy to PT. XYZ to adopt cost leadership, which comprises of highly cost-efficient production process while offering differentiated fresh fruit bunches products to palm oil mills as buyers. This proposed strategy can potentially result in sustainable margin and profitability with sustainable competitive advantage in the long term for PT. XYZ