BUSINESS INVESTMENT DECISION OF PT AIG (INVESTMENT HOLDING COMPANY) IN PENETRATING THE CONSTRUCTION INDUSTRY BY ESTABLISHING A COLLABORATIVE STRATEGIC ALLIANCE

• Main Author: Joseph F Sirait, Geraldo
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/76563
• Institution: Institut Teknologi Bandung

PT AIG, an investment holding company in the industrial construction sector, is evaluating how to enter the large-scale construction sector. Available options are collaborating with an experienced company, establishing a joint venture (JV), acquiring a construction company, or starting a new construction company. PT SWG, a construction company facing financial difficulties, is seeking to recover by collaborating with PT AIG. To determine the best investment option and evaluate PT SWG, market segmentation, internal and external analysis, financial analysis, company positioning strategy, and Economic Value Added (EVA) are conducted. The analysis shows that PT AIG falls into the 4th quadrant of company positioning, indicating dominant strength and threat, while PT SWG falls into the 2nd quadrant, indicating dominant weakness and opportunity. By combining their positive traits, the alliance can move into the 1st quadrant, representing growth. Leveraging their strengths in finance, innovation, human resources, facilities, and reputation, both companies can outperform competitors. Financial analysis and EVA indicate that PT SWG's market valuation remains negative for the first six years of the alliance, PT SWG's market valuation starts to rise exponentially, leading to a positive market valuation by the ninth year if the alliance succeeds. Based on these analyses, a non-equity strategic alliance is chosen as the best alternative. This alliance provides a shortcut to enter the industry, positive revenue and profit for each project, and potential higher returns on investment. Legal standing is established through contract agreements regulating project execution, capital injection, profit sharing, and scope division. Resource and activity sharing will be crucial, with PT AIG contributing to human resource management and PT SWG focusing on procurement, logistics, and services. Sales and marketing efforts will aim to increase annual sales while maintaining operational excellence. Profit sharing will be evenly split between the alliance members after deducting expenses. It is important to note that the unique conditions of PT AIG and PT SWG may not apply to other cases. PT AIG should evaluate the performance of the strategic alliance annually and be prepared to establish its own construction company if PT SWG withdraws from the alliance in the future.