PROPOSED STRATEGIC RESPONSES FOR JAPAN AUTOPART COMPANY: AN EMPIRICAL INVESTIGATION TO MILLENNIALS PREFERENCE

• Main Author: Vinny
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/47637
• Institution: Institut Teknologi Bandung

With more than 40 years of experience in the auto-part industry, JAPCO (Japan Auto-Part Company) has grown as the market leader in Indonesia and survived through severe crises. This success story started to shift in just a decade due to several challenges. While the system of the company is not ready to move forward, the external disruption is on the rise, attacking the industry to start shrinking. Internally, the company is fighting with the continuous decrease of net profit to only 5% (which is lower than bank interest). Inefficient warehouse management, strong labor union to fight, outdated machinery on the production floor, the fully adapted three pillars of Japanese human resource management, bureaucratic Japanese administration system, and chaotic information systems, has pushed the operational cost to the maximum condition. Externally, the company is facing eight competitors (setting up price war on the market) nationally and internationally, ride-hailing services, government regulations, shifting of Millennials’ preference in delaying car ownership, massive construction of public transportation that ease mobility and oversupplied of passengers cars on auto-market. Few initiatives and strategies have been reviewed by top management to manage these challenges, but there is no significant improvement yet. The paper seeks to answer the question about car demand in the future by conducting empirical research by distributing questionnaires to 200 Millennials’ in Jakarta, Surabaya, and Medan to ask about their perception and preference about cars with a statistical approach (K-Means Cluster Analysis, ANOVA and Multiple Regression Analysis). The first result shows that their demand for cars will still have the potential to grow (but with limitations). Secondly, the result proves that the generation is so price-sensitive, yet concerning the environmental issues faced globally. While Millennials are currently holding the largest cohort of the population in Indonesia, entering the productive age, and will become the economic target for the next two decades, proper strategic responses should be adjusted to meet their preferences. Refer to the research result and current JAPCO reputation as the market leader, differentiation strategy that seeks to create value for the customers, but still controlling the cost, is still the best strategy to be implemented. Furthermore, due to JAPCO’s commoditized product condition, the company should choose the type of innovation wisely to be performed within the organization, especially in how to control the operational costs, but still be able to stand upfront in grabbing additional market share for the company. It is hoped that the paper will be informative and beneficial for auto-players in the country to react to the change of passengers cars market, and be able to survive the competitive condition.