TRIBUTE TO SAMUDERA INDONESIA BUSINESS CASE

DEVELOPING CARGO TRANSPORTATION AND INTEGRATED LOGISTIC

STRATEGY

THE STRATEGY
OF

S A M PA I

THE SIPIT TEAM

( PPM SCHOOL OF BUSINESS - INDONESIA )

LATIFAH INON AZZURI

ORVINA MARCHELIN
T. A. THAARIQ
Introduction
PT Samudera Indonesia, Tbk (will be written as SI) embarked on its journey in the
national transportation and logistics as a shipping agency back in 1950s. Along with its
vision: “making Indonesia interconnected and connecting Indonesia to the world”, the
company provides a one-stop integrated logistics service solution which currently has
four business lines namely shipping (Samudera Shipping), agencies (Samudera
Agencies), logistics (Samudera Logistics), and terminal (Samudera Terminal).
Among these four business lines, the company services provided warehouse and
distribution center, container depot, inland transport, terminal, container shipping, bulk
carrier, tanker, and offshore shipping, third-party logistics, project logistics, to agency and
ship management. To affirm and strengthen its existence in the eye of public and global
transportation and logistics industry, SI decided to go public by listed its share in
Indonesia stock exchange on July 5, 1999 with ticker symbol of SMDR.

Problem Identification
However, in the past three years from 2012 to 2014, its line of business financial
performance has declined year-on-year, as shown in Exhibit 1 and 2 in material case of
6th RBCC PPM SOM. The decrease was mainly due to the depreciation of Rupiah against
US Dollar. Last position of the company’s revenue and profit in 20141, Samudera
Shipping contributed consolidated company’s revenue and profit at 70% and 46%,
followed by Samudera Logistics at 14% and 14%, Samudera Terminal at 13% and 21%,
and Samudera Agencies at 4% and 19%. To solve this issue of revenue decreasing, SI
would have to choose the best strategy to win the competition in end-to-end logistics
industry.

Corporate Strategy Analysis

Directional Strategy
The directional strategy which provide orientation for the company regarding the
business situation. In this analysis, orientations are growth, stability, and retrenchment.
Growth includes concentrated (vertical and horizontal) and diversification (concentric and
conglomeration). Stability includes maintaining profit and maintaining position.

1
PT. Samudera Indonesia, Tbk - Annual Report 2014
Retrenchment includes turnaround, divestation, and liquidation.

Portfolio Strategy
The portfolio strategy is about making decision about industry composition or
market of the company, by managing multiple business units to reach optimum company
performance. Portfolio analysis in this report would use GE Matrix to evaluate industry
attractiveness and business strength/competitive position. Based on GE Matrix (see
Exhibit 1), business unit of shipping and logistics show high competitive advantages and
high potential success, by showing most highly attractive and strong indicators.

Parenting Strategy
Corporate strategy basically is what holding company do to create value in multi
business company. There are four ways that holding company could do value creation on
its business units: Stand Alone, Linkage Influence, Functional and Services Influence, and
Corporate Development Activities. Value creation will be formed if the character of
holding company are suitable with the character of the subsidiaries (see Exhibit 2). This
strategy would be matching critical success factors of the holding company and the
subsidiaries, and locate them in Parenting Fit Matrix (Exhibit 3,4,5).

Based on those corporate strategies, the selection of which business unit that have
most high competitive advantages and high potential success would consider
opportunities in logistic market. SI which has strong competitive position in the end-to-
end logistics market, would have concentric diversification as their growth directional
strategy.
Investment in The Strategy of SAMPAI
The increasing of competition between end-to-end logistics industry makes us
realize that it is needed breakthrough strategy for SI to be market leader in their industry.
Furthermore, SI needs the next 5 years strategy and it called SAMPAI. What is
“SAMPAI”? SAMPAI, literally, is an Indonesian word means “arrive”, “get to a place”, or
“reach”. Alphabetically, first and last letter: S and I would represent “Samudera
Indonesia”, while the next letters, “-AM-” and “-PA-” would be the abbreviations of
AMAN, which means “safe”, and CEPAT which means “fast”. Therefore, considering the
SI’s vision of “Making Indonesia Interconnected and Connecting Indonesia To The
World”, SAMPAI Strategy would reflect three major aspects in realizing the vision:
SAMPAI (reach), AMAN (safe), CEPAT (fast). To manifest SAMPAI, customer segment
that SI should collaborate with merchants UKM (small medium enterprise). It is
suggested that this strategy can reach all-end-customers every place in Indonesia.

1. Samudera Indonesia must expand to E-commerce and logistics courier express

Based on SPIRE data, total of Indonesian population is around 250 million which
is the dense is take the fourth rank in the world2 and the amount of active Internet users
are 90 million. This will effect the increasing of Indonesia E-commerce development
which from year on year is increased around 26%. We found some of the opportunities
from E-commerce3, as follows:
1. Rapid growth of internet users
2. Double growth smart phone users since 2013, providing accessibility and
connectivity
3. Growth of e-commerce player
4. Growth of customers’ trust in using online payment system
5. Growth of urban lifestyle, leading to the convenience of online shopping

Therefore, it is suggested SI to make E-commerce sites itself, it call

2
http://www.indonesia-investments.com/id/budaya/demografi/item67 (downloaded at
3/10 19:11)

3
http://www.slideshare.net/spireresearch/150519the-rise-of-express-courier-in-
ecommerce-business?related=1 (downloaded at 1/10 20:00)
www.SIpasar.com. In this sites SI will cooperate with small and medium enterprise in
Indonesia because there are 40 million small medium business in Indonesia4. However,
for the next 5 year, SI just focused on fashion seller which we found SPIRE data that
Indonesia’s best selling e-commerce product in 2013 is fashion (35%), second is travel,
music and games (20%). Meanwhile, SI is suggested to cooperate with many types of e-
commerce sites in Indonesia, such as Lazada and OLX etc, to be their partners as courier
express. These sites are an e-commerce sites that is very popular in Indonesia5.

Figure 1. Indonesia’s E-commerce Market Development

Because of increasing in e-commerce industry, it also will make incline the growth
of logistics courier express. As shown in figure below, it shows that growth of
transportation, storage and courier services in 2015 will be aided by the growth of trading
sector, especially the domestic ones. Furthermore, Figure 2 shows rise of middle class
will result in profound change as well as create opportunities in transportation and
logistics industry.

4
http://www.slideshare.net/TechinAsia/startup-asia-jakarta-2013-state-of-
ecommerce-in-indonesia?related=2 (downloaded at 1/10 20:00)

5
http://www.slideshare.net/nusaresearch/topline-finding-ecommerce-
eng?related=1 (downloaded at 5/10 20:08)
 Figure 2. Economic Growth and Logistics Market 2014

JNE’s revenue in 2014 is around 2 billion6 which means JNE is market leader for
courier express industry with 35% market share. JNE has 60% sales turnover from e-
commerce retail sales and the growth increase up to 15% year on year 7. Based on these
reasons, we can conclude that logistics courier express industry can produce a lot of
revenues for company.

2. Samudera Indonesia Enter Tanah Abang Market Jakarta

It is suggested that SI must reach new area, especially in Tanah Abang market
(this market is one of the biggest market in ASEAN for fashion industry). Sales turnover
in Tanah Abang is Rp 200 billion per day. Now, Tanah Abang is having 4 blocks (A, B, F
and G). The total number of stalls in Block A reach 8,000 units, block B 5,000 kiosks, and
Block F 4,000 stalls, while Block G has around 1,300 kiosks and counters. By
considering this, SI should have penetrated Tanah Abang market in order to increase their
profit. Eventually, SI will collaborate together with traders of Tanah Abang to provide
courier service for their buyers and get connected with mobile apps SIporter to find
trusted porter for carry customer things.

6
http://www.indotelko.com/kanal?it=JNE-Andalkan-eCommerce-untuk-
Pendapatan (downloaded at 5/10 20:08)

7
http://www.slideshare.net/spireresearch/150519the-rise-of-express-courier-in-
ecommerce-business?related=1(downloaded at 5/10 20:08)
5. CONCLUSION
To make this program happened, first SI must invest infrastructure with open
many new branches, as seen at Exhibit 6. By this investment is expected to open up
employment opportunities and be able to recruit for 10000 people as expected in 2024,
especially recruiting many engineers in IT to support e-commerce SAMPAI strategy.

The oppportunities in business of logistics and shipment following the growth of e-

commerce business in Indonesia must not be missed by SI to gain more revenues. With
The Strategy of SAMPAI, SI would target traders or merchants or small medium
enterprises all over Indonesia to begin more realizing its vision “Making Indonesia
Interconnected”. To do the strategy, SI would do some preparations:
1. Establish new business unit: express courier and delivery services
2. Create its own e-commerce sites covering traders/merchants/small medium
enterprises as many as possible. (1st Project: Traders/merchants of Tanah Abang
Grocery Market)
3. Adding SAMPAI channels in every city.
4. Invest in building infrastuctures needed and human resources recruitment.

Therefore, in 2020, costumers would found SAMPAI in every popular e-commerce

sites in Indonesia or ASEAN as their main logistic support services; every merchants in
Tanah Abang Grocery Market suggests their customers to use SAMPAI services; every
small medium enterprises in Indonesia use SAMPAI (and Samudera Shipping business
unit) to deliver their products to all over Indonesia and to overseas.

If SI do not take this chance now, the others will. Sayonara, Samudera.
EXHIBIT 1: GE MATRIX

EXHIBIT 2 : CRITICAL SUCCESS FACTOR OF THE COMPANY

EXHIBIT 3: PARENTING FIT MATRIX

EXHIBIT 4: INDUSTRY ATTRACTIVENESS

EXHIBIT 5: BUSINESS STRENGTH

EXHIBIT 6: THE SUGGESTION OF NEW INFRASTRUCTURE (BRANCHES)

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http://www.indonesia-investments.com/id/budaya/demografi/item67

http://www.samudera.com/

http://www.slideshare.net/nusaresearch/topline-finding-ecommerce-eng?related=1

http://www.slideshare.net/spireresearch/150519the-rise-of-express-courier-in-ecommerce-
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http://www.slideshare.net/spireresearch/150519the-rise-of-express-courier-in-ecommerce-
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PT. Samudera Indonesia, Tbk - Annual Report 2014