Ford is considering entering the Indonesian automobile market. Indonesia has a population of 240 million people and average annual GDP growth of 6%. The automobile market is growing rapidly, dominated by Japanese brands. Ford would target the growing affluent class and introduce popular models like the Explorer, Flex, Ranger and Escape initially. Key competitors have large shares and are investing heavily in production facilities. Television is the dominant advertising medium currently, though mobile use is growing rapidly. Challenges include developing local supply chain and distribution networks. Ford recommends a regional production strategy to serve the large ASEAN market and expanding dealerships to accommodate sales growth.
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Ford final recommendations indonesia
1. Ford Motor Company
Indonesia Entry Strategy
Eric Chan
Naveen Cheerath
Dandan Chen
Leslie Forte
Lance Kim
Wenfeng Tang
Renzhong Yu
Lele Zheng
2. Agenda
Indonesia Overview
This is an example text. Go ahead and replace it
Conclusion
Competitor Analysis
Supply Chain
Questions6
5
4
3
2
1
Marketing
4. ASEAN
• A geo-political and economic organization – 10
nations
– 3% of total land area of Earth
– A population of approximately 600 million, 8.8% of the
world’s population
– As a single entity, the 8th largest economy in the world
• Average GDP growth rate 2007- 2012: 5.1%
• GDP per capita: $5,807
Data source: http://www.dfat.gov.au/geo/fs/asean.pdf
5. Demographic
• Indonesia is the doorway to Southeast Asia’s
650 million inhabitants
• Population: 240 million; Around 58%
population live in Java
• GDP: 846.8 billion
• Average economic growth rate: 6%
• Average per capita income US$3,500
• Encouraging FDI policies
• Car ownership: 45 vehicles per 1,000 people
6. Indonesia market & GDP
-25.00%
-15.00%
-5.00%
5.00%
15.00%
25.00%
35.00%
45.00%
55.00%
2008 2009 2010 2011 2012
Market growth rate & GDP growth rate
Car sales growth rate GDP Annual Growth Rate
http://www.indonesia-investments.com/news/todays-headlines/indonesias-car-industry-continues-strong-growth-in-q1-2013/ite
m634
http://www.tradingeconomics.com/indonesia/gdp-growth-annual
7. Macro Economy
• Strong economic expansion
• Record low interest rates
• Auto market has expanded rapidly
• Expect Indonesia to emerge as the largest auto
market in Southeast Asia in 2014
• More interconnected with ASEAN
economy
8. Consideration of model selection
Affluent class with a disposable
income above $7,500 a month
6.6% of country’s 240 million
people, possible reach 16.5% in
2020
Luxury and sports cars are becoming
a more common sight, particularly in
the capital, as Indonesia's elite
grows. It is forecast to jump from
around six million people to 16.6
9. Model selection
Indonesia's car market is dominated by van or Multi
Purpose Vehicle (MPV)
A kindly of utilitarian, capacious vehicles – a low-
priced seven-eat multipurpose vehicle
Demand for light vehicles is expected to grow rapidly.
Mostly young and techno-savvy, discerning
consumers…who want cars that match with their
gadgets and lifestyles.
13. Competitor Analysis
• Japanese brands have about 95% of the market.
• Low- med end vehicles dominate the market-
95%
• Customers have more preference of MPV.
• Indonesia car sales increased by 17.8% in Q1
2013.
16. • Suzuki invested $80 million in expanding
production in Indonesia.
• Toyota invested $20 million in expanding
production in Indonesia.
• Mitsubishi will invest $1.8 billion in five years
in Indonesia.
• Daihatsu plan to invest $24.6 million in
Indonesia.
• Chrysler plan to invest $10 million in
Indonesia.
Competitor News
17. • In Q1 2013, Sales growth of Toyota:
8.4%, Daihatsu: 5.2%, Mitsubishi:
8.2%, Suzuki: 70.4%, Honda: 228.8%
• Benz, BMW, Chevrolet increased
assembling rate to decrease taxes.
• Chevrolet restored its factory in Indonesia
to manufacture Chevrolet Spin to compete
with Toyota Avanza.
Competitor News
19. “Ford goes further to build great, environmentally sound products, a strong
global business and a better, more humane world. We go further every day by
offering vehicles with innovative technologies, plug-in hybrids and EcoBoost®
engines that combine power and efficiency”
Go Further
22. Strategy: to humanize the company
by connecting consumers with Ford
employees and with each other when
possible, providing value in the
process.
23. Ford Dealers in Indonesia
Sumatra - 9
Papua - 5
Bali - 3
Kalimantan - 6
Java – 28
Sulawesi - 3
24. Television accounted for more than 60% of ad
spending, followed by newspapers (34%) and magazines (3%)
25. • Television is the dominant source
of news and entertainment.
– Over 90% of Indonesian households
have a TV set
• Spend about 40% of time watching
television
• Main focal point for social
gatherings
– Main viewing times are in the evening
• Affluent communities have cable
Television
27. Mobile Growth
(81.0%) Indonesians now
saying they have a mobile
phone in their household, up
from two-thirds (67%) in 2011
(49.8%) Indonesians now
say they use SMS/text
messages at least once a
week to get news
28. Recommendation
Hitting the television market first will ensure the largest amount of exposure
to consumers because of the high existing amount of television viewers
Television
Waiting and strategically implementing mobile device marketing
campaigns, Ford can effectively target this growing segment over time
Mobile Device
Once online penetration increases, Ford can deploy full forced online
marketing and social media campaigns.
Internet
1
2
3
30. Operation and Supply-Chain
Distribution in partner with
RIMC
Held 100 million Supply-
Chain project in Indonesia
Cars are Imported from Thailand.
Distribution with IndoMobile
Current Operation is managed by
Ford’s ASEAN Region
31. Demand
ASEAN Operation keeps inventory at dealership at a minimum
De
ma
nd
Waitlist is provided for car buyers
and depends on the model, wait
time ranges from 5 days to 6
months
Supply-Chain
Thailand’s Hub Manufacturing
Supply
32. Challenges in Supply-Chain
Indonesia currently lacks infrastructure to support plant operation
and export.
Takes 18 days for to export and 21 days import
(Documentation to port handling)
40% of the roads lack the ability to handle standard 40 ft.
freight trucks (20-25 tons)
Ford lacks a strong local distribution network & partners
Ford’s shift of investment in 1999 still has lingering
effects. A distrust among local dealerships.
Local partnership is not exclusive. IndoMobile also
operates JV with VW, Nissan, Volvo etc.
Demand forecast is grouped with other ASEAN
33. Recommendation
• Regional Development of Production and Supply Chain in ASEAN
Reasons:
1). 2 Billion potential customers and reached $5k-$6k per
capita income level
2). Till 2020, Industry volume 32MM units to 52 MM
units, APA accounts for 46% of global automotive
industry and over 60% of its growth.
3).Align capacity with demand means adding a significant
amount of capacity the next several years
4). One ford plan : produced on global platforms with 80%
parts commonality and gives us the scale
generate profit
5). Elimination or lower tariff barrier
6). Utilize the different advantages in different countries
34. Recommendation
• Expand dealer network in Indonesia to
accommodate sales growth
• Provide the car models that fit for the regional
consumer needs( quality, fuel
efficiency, safety, smart tech)
• Enhance consumer satisfaction through the
3S service concept ( Sales-service-spare
part)
• Cooperate with 3rd party to facilitate the
process
The Republic of Indonesia consists of five large islands and 13,677 smaller islands (about 6,000 of which are inhabited) forming an arc between Asia and Australia. With a total area of 1,919,440 sq km (741,100 sq mi), Indonesia is the fourth-largest Asian country, after China, India, and Sa'udi Arabia. Comparatively, the area occupied by Indonesia is slightly less than three times the size of the state of Texas. It extends 5,271 km (3,275 mi) E–W and 2,210 km (1,373 mi) N–S. The five principal islands are Sumatra; Java; Borneo, of which the 72% belonging to Indonesia is known as Kalimantan; Sulawesi, formerly called Celebes; and Irian Jaya (West Irian), the western portion of the island of New Guinea. Indonesia has land boundaries with Malaysia (on Borneo), Papua New Guinea (on New Guinea), and East Timor (on Timor). It is bounded on the N by the South China Sea, on the N and E by the Pacific Ocean, and on the S and W by the Indian Ocean. Indonesia's total land boundary length is 2,830 km (1,758 mi). Its coastline is 54, 716 km (33,999 mi).
Indonesian foreign direct investment reached US$24 billion in 2012, up 26% from 2011 – a record high. “There is no way you can run the economy with 7% growth and have this current account deficit of 5%, because it will not be sustainable, so the only way to do it is to encourage foreign investment to come to the country,” “This role of foreign investment becomes very important to ensure the Indonesian economy achieves 7% economic growth in order to create jobs to reduce poverty.”
Indonesia is targeting economic expansion of 6.5 percent to 6.8 percent this year after gross domestic product rose 6.1 percent last quarter. The outlook for growth, and interest rates held at a record low 5.75 percent for a 13th straight month have helped drive the benchmark Jakarta Composite Index up 21 percent in the past 12 months.Record low interest rates, a tight job market, and soaring stock prices are boosting consumers’ ability and willingness to spend in Indonesia,” Master of LMC said.Indonesia’s auto market expanded 25 percent last year, compared with 4.2 percent for China,’s according to data compiled by Bloomberg. South Korea’s, where Hyundai gets more than 60 percent of its operating profit, shrank 1.7 percent.“We expect Indonesia to emerge as the largest auto market in Southeast Asia in 2014,” said Thongpak of IHS.The combined population in Southeast Asia is about 650 million people now and Southeast Asia is going to become more interconnected ahead of the planned formation of the 2015 Asean economic committee, Richardson of Samsung Asset said.
Cars are mostly bought by Indonesia's affluent class, those with a disposable income above $7,500 a month and who represent 6.6 percent of the country's 240 million people, according to a recent report by the Boston Consulting Group. This figure, says Boston, will reach 16.5 percent in 2020.
Without local production, Hyundai probably can’t develop the kind of utilitarian, capacious vehicles craved by Southeast Asian car buyers, “For Indonesia, you need a low-priced, seven-seat multipurpose vehicle