Nining Thesis Final January 2007

THE ANALYSIS OF APARTMENT INDUSTRY COMPETITIVE STRATEGY AT CBD JALAN SUDIRMAN IN JAKARTA
By Sri Yulianingsih Sumantri (Indonesia)
This paper was submitted in partial fulfillment of the requirements for the Master of Business Administration (MBA) degree at the Maastricht School of Management (MSM), Maastricht, The Netherlands and Magister Manajemen (MM) at Trisakti International Business School, Jakarta, April 2006
CHAPTER I INTRODUCTION
1.1. BACKGROUND The Jakarta market (as of first Quarter 2005) had a total number of 32,372 apartment units, an increase of 1.8% Quarter to Quarter with two completed projects in South and Central Jakarta. There were five new projects introduced in the quarter which will boost the market with an additional 1,940 units will also be launched. Among types of apartments, the semifurnished units are now popular in attracting buyers. West Jakarta was the largest apartment unit provider in Jakarta up to this quarter; in 2007 North Jakarta will replace West Jakarta. Jakarta Condominium stock will grow tremendously in 2007 and double the number of existing units. Luxury apartments were bought for collection purposes as well as investment. For several quarters, price per sq m remained unchanged, owing to tight competition, and remained in the range of Rp 5 million/sq m (lower segment) up to Rp 24 million/sq m (luxury segment). Coldwell Banker Commercial Indonesia said in its quarterly overview1 on the Greater Jakarta property market that the total stock of condominiums at the end of the first quarter of 2005 stood at 35,001 units, with 7,977 units in prime locations and the remaining 27,024 units in secondary areas. The property brokerage company also reported that total stock of apartments remained at 10,549 units, similar to last year. Meanwhile, ongoing condominium construction projects -- including the Sudirman Mansion, SCBD Suites (Sudirman Central Business District), Senayan Residence, Mediterania Lagoon Residence and Mediterania Boulevard Residence -- have achieved between 90 percent and 100 percent absorption rates. Coldwell has forecast that the condominium market would remain buoyant in the short term as developers continue to flood the market with plenty of supply. It added that there were 68 condominium blocks under construction, and that would bring it to a total of 45,000 units over the next three years and would also create tougher competition, falling occupancy levels and declining sales prices. While rental fees for apartments remain relatively stable, according to Coldwell, ranging between US$2.84 and $27.06 per square meter per month, an increase of
1
Colliers International Quarterly research Report, 1Q 2005, Jakarta, 2005.
0.72 percent from December. About 85 apartment units were leased in this year's first quarter, totalling 7,776 units that have been leased since 1999. Coldwell said two apartment projects were expected to finish by mid 2005, namely the Aston Rasuna with 96 units and the Marriott Executive Apartment with 72 units, both of which are in South Jakarta. For lease able retail properties, Coldwell said overall occupancy in this year's first quarter increased by 0.59 percent, compared to the first quarter in 2004 although no new retail center was completed during the quarter. The vibrant condition forced rental prices to increase by 6.88 percent to Rp 260,373 per square meter monthly for secondary locations and to Rp 570,938 per square meter for primary locations. For strata-titled properties, the stock remains at 1.03 million square meters as no new supply was added due to delayed construction. The selling price for strata-titled retail property remains stable in the range of Rp 50 million to Rp 283 million per square meter, while projects under construction are offered at Rp 30 million to Rp 98.5 million per square meter, an increase of 6.63 percent over the fourth quarter 2004. The Indonesian apartment market is expected to remain strong as apartments are still seen as more profitable investments given the currently low deposit interest rates. But the threat of oversupply persists. Data from property consultants and analysts show a jump in the annual supply of apartments on the market. Not only is the number of units due to be completed this year on the rise, but also that of those scheduled to be finished in the coming years. Collier International Indonesia (CII) predicts Jakarta apartment supply will experience significant growth of 56.3 percent in 2006. This will bring an additional 21,385 units onto the market and result in a massive increase in cumulative supply to more than 59,300 units. Property analyst Panangian Simanungkalit was quoted by Kompas as saying that around 6,500 new apartments have been constructed each year between 1998 and 2005, compared to 1,300 each year between 1980 and 1998. With 2006's annual supply going to be the highest annual supply ever in the market's history, the threat of oversupply has started to cause concern among some market players. However, others remain optimistic about market prospects. Jakarta's traffic congestion has persuaded many people to move to apartments that are near their offices. For these sorts of people, apartment living is more than just a lifestyle, it is a necessity. Aside from targeting people like these, CBD (Central Business District) apartments in Jakarta are also aimed at investors. Rather than putting their money in low-return bank
deposits, wealthy Indonesians hope to gain more by purchasing apartments in and around the CBD and prestigious areas in South Jakarta, such as Kemang and Pondok Indah.
1.2. PROBLEM STATEMENT With a large number of new developments due to come on the market in 2005 and in coming years, Jakarta will remain a hot market for apartments. But outside Jakarta, particularly in Singapore and Australia, developers are also boosting their efforts to persuade wealthy Indonesians to invest in the apartment markets in those countries. The effort to attract Indonesian buyers has paid off, with Kompas daily reporting that Indonesians constitute the biggest overseas buyers of Singapore property, followed by people from Malaysia, Brunei Darussalam, Hong Kong and Shanghai. However, optimism is still high among Indonesian developers that they will not lack buyers. Investors have suffered losses in the Singapore apartment market due to a drop in property prices of between 35 percent and 45 percent, and low rental income. Research conducted by Procon (Property consultant) mentioning the motivation to live in an apartment in Jakarta. The majority of respondents mostly chose to live in an apartment mainly for living 48%, for investment purpose 31%, for second home 13%, and for other family member 8%.2
Figure 1-1. Motivation to Buy Apartment
other family 8% second home 13% living 48%
investment 31%
Source: Colliers International Indonesia, Research Department, 2005.
Kompas, Eksekutif Muda Pembeli Apartemen, May 06, 2004
There are some important criteria for choosing apartments, such as location in the heart of the city, comfortable environment, close to work place, layout of apartment, complete facilities, building design and quality, and also important is comprehensive safety. Among all locations, Sudirman CBD become the most chosen location 34% followed by South Jakarta 17%, CBD HR Rasuna Said 15%. The rest consists of CBD Mega Kuningan 8%, CBD SCBD 6%, CBD Thamrin 4%, Satrio 4%, Jakarta Utara 4%, Jakarta Barat 6%, Jakarta Pusat 2%.3
Figure 1-2. Location Preference of Apartment
CBD Jalan Thamrin 4% Central Jakarta 2% West Jakarta 6% North Jakarta 4% CBD-SCBD Area 6% CBD Jalan Satrio 4% Mega Kuningan 8% CBD Jalan Rasuna 15% South Jakarta 17%
CBD Jalan Sudirman 34%
Many predispositions of people to select the representative apartment which might have several considerations such as close to business activities, shopping centre and the like become the problem for the development of competitive strategy for the apartment industry in Jakarta especially at the Sudirman CBD in order to fight the competition. .
1.3. RESEARCH OBJECTIVES The objectives of this research are: 1. To outline the situation and highlight the developments in the apartment industry at the CBD Jalan Sudirman in Jakarta in particular for both new companies and leading companies which have previously built and developed several apartments at that area. 2. To discuss the various challenges confronting competitive advantages in the apartment industry at the CBD Jalan Sudirman in Jakarta.
3
Ibid.
3. To establish suitable strategies that apartment industry at the CBD Jalan Sudirman in Jakarta should adopt to ensure their future viability.
1.4. THEORETICAL FRAMEWORK The study will focus on business-level intended competitive strategy within the apartment industry. Since the strategy professed by company executives may differ from the strategy that a company actually implements, intended strategies may differ from realized strategies (Snow and Hambrick 1980).
Figure 1-3. Theoretical Framework
Realized strategies may be the result of deliberate strategic decisions (intended strategies) or they may reflect reactions to industry changes that have no underlying strategic basis. However, focusing on intended strategy allows the use of strategic self typing by top management personnel. The perceptions and opinions of this group largely determine the organizations strategy (Snow and Hambrick 1980). Focusing on intended strategy also allows strategic change in the industry to be predicted. The theoretical framework will follow Porters 5 forces which were identified into
variables as explained further in Chapter III.
1.5. RESEARCH QUESTIONS Based on the research ideas, the research questions have been generated at the beginning of the research process. The idea of this research is to set clear conclusions in order to answer these research questions based on the data collected. The major research questions are: 1. What are the developments in the apartment industry at CBD Jalan Sudirman in Jakarta? 2. How to gain competitive advantage in the market for apartment industry as one of potential investment at CBD Jalan Sudirman in Jakarta? 3. What are the strategies that apartment industry at CBD Jalan Sudirman in Jakarta should adopt to ensure their future viability? The minor research questions are: 1. What are the forces which influence the apartment industry competitiveness at the CBD Jalan Sudirman in Jakarta? 2. What are the detailed action plans to for the CBD Jalan Sudirman Apartments? 3. What are the specific priorities for the CBD Jalan Sudirman Apartments to ensure their future viability? The research questions above were used as a base from which to write a set of research objectives. The research objectives below are evidence of the clear sense of purpose and direction in conducting this research.
1.6. RESEARCH METHODOLOGY 1.6.1. Research Design The research design were a descriptive research using survey methods. This research is considered as an inductive research. Questionnaire were used as research instrument. Quantitative strategic data were gathered via an 18-item measure adapted from Dess and Davis (1982, 1984)4. The measure developed by Dess and Davis were judged to have met the three concerns in strategic measurement as presented by Thomas and Venkatraman (1988): (1) It captured (with minor changes) the basis of competition in the industry; (2) It had a strong relationship to existing strategic topologies-specifically, Porter (1980); and (3) the works of Dess and Davis (1982, 1984) provide evidence of the validity and reliability of the measure. Minor changes were made in the measure to ensure applicability to the apartment industry. Data Collection Primary source were used to gather data from the sample firms. While the secondary information were obtained from Colliers International, property reports, internet and news. In multi industry companies, the questionnaire were directed to the management of the business unit apartment, tenants and brokers. Five sample of Apartment companies consist of: 1. Pavilion Apartment 2. Batavia Apartment 3. Istana Sahid Apartment 4. Plaza Apartment 5. Sudirman Tower Condominium The samples include the category of apartment type: fully-furnished service apartment, unfurnished and fully-furnished without service.
Data Analysis Methods
Dess G.G. and P.S. Davis (1984), Porters (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy Management Journal. 27(3); 467-487.
The result from the questionnaire were put into a calculation to obtain mean value of each variable for competitiveness factors and threat factors. The mean values became the source for the gap analysis. The formula for mean factors are as follow5: Xi - Xn = -----------------n Yi - Yn = -----------------n = Xi - X = Yi - Y
Mean value of competitiveness
Mean value of threat Gap of competitiveness Gap of threat Where: Xi - Xn n X Y
= value of competitiveness scale = number of samples = total means of Xi - Xn = total means of Yi - Yn
Yi - Yn= value of threat scale
Competitive factors and threat factors were developed to find gaps on attributes and categories. The scores then were put into the graph, to determine the gaps among attributes and categories in relation to the competitive advantage value. The gaps of each attribute in each quadrant of the graph were identified, and evaluated in comparison with the performance standards, to find the appropriate reasons why the gaps occur and thus determine the basis for operating strategy formulation. The operations strategy were formulated based on the results whereby each result was translated into strategic actions to meet the performance standards. The strategy will allow apartment industry to continuously upgrade their performance.
CHAPTER II LITERATURE REVIEW
2.1. COMPETITIVE STRATEGY Every firm competing in an industry has a competitive strategy, whether explicit or implicit. Essentially, developing a competitive strategy is developing a broad formula for how a business is going to compete, what its goals should be, and what policies were needed to carry out those goals. This chapter will review a classic approach strategy formulation that has become a standard in the field. Figure 2 1 and 2 2 illustrate this approach. Figure 2 1 illustrates that competitive strategy is a combination of the ends (goals) for which the firm is striving and the means (policies) by which it is seeking to get there. Figure 2 1 The Wheel of Competitive Strategy
Product Line Target Markets
Finance and Control
Marketing
Sales
Research and Development
Purchasing
Goals
Labor
Distribution
Manufacturing
Source: Porter, M.E. (1980) Competitive Strategy, New York, Free Press.
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Figure 2 1, which can be called the Wheel of Competitive Strategy, is a device for articulating the key aspects of a firms competitive strategy on a single page. In the hub of the wheel are the firms goals, which are its broad definition of how it wants to compete and its specific economic and non-economic objectives. The spokes of the wheel are the key operating policies with which the firm is seeking to achieve these goals. Under each heading on the wheel a succinct statement of the key operating policies in that functional area should be derived from the companys activities. Depending on the nature of the business, management can be more or less specific in articulating these key operating policies; once they are specified, the concept of strategy can be used to guide the overall behaviour of the firm. Like a wheel, the spokes (policies) must radiate from and reflect the hub (goals), and the spokes must be connected with each other or the wheel will not roll. Figure 2 2 Competitive Strategy
Company Strengths and Weaknesses Industry Opportunities and Threats (Economic and Technical)
Factors Internal to the Company
Competitive Strategy
Factors External to the Company
Personal Values of the Key Implementers
Broader Societal Expectations
Source: Porter, M.E. (1980) Competitive Strategy, New York, Free Press. Figure 2 2 illustrates that at the broadest level formulating competitive strategy involves the consideration of four key factors that determine the limits of what a company cab successfully accomplish. The companys strengths and weaknesses are its profile of assets and skills relative to competitors, including financial resources, technological posture, brand identification, and so on. The personal values of an organization are the motivations and needs of the key executives and other personnel who must implement the chosen strategy. Strengths and weaknesses
11
combined with values determine the internal (to the company) limits to the competitive strategy a company can successfully adopt. The external limits are determined by its industry and broader environment. Industry opportunities and threats define the competitive environment, with its attendant risks and potential rewards. Societal expectations reflect the impact on the company of such things as government policy, social concerns, evolving mores, and many others. These four factors must be considered before a business can develop a realistic and implementable set of goals and policies.
2.2. FIVE FORCES OF PORTER MODEL Michael Porter described a concept that has become known as the "five forces model". This concept involves a relationship between competitors within an industry, potential competitors, suppliers, buyers and alternative solutions to the problem being addressed. Many researchers used the five-forces model as a basic structure and built on it with concepts from the works of many other authors. While each industry involves all of these factors, the relational strengths vary. Researcher uses input from the user to create a unique model of their industry. Then thousands of "rules" are applied to evaluate hundreds of marketing and business concepts as they relate to the user's unique circumstances. This results in a set of analyses, including:

a success potential rating in eleven key areas a list of strategic strengths and weaknesses observations on strategic inconsistencies a written critique of your strategy a graphic analysis of key marketing concepts a written draft of a marketing plan
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Porter explains that there are five forces that determine industry attractiveness and longrun industry profitability. These five "competitive forces" are: The threat of entry of new competitors (new entrants) The threat of substitutes The bargaining power of buyers The bargaining power of suppliers The degree of rivalry between existing competitors
Threat of New Entrants New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to entry include Economies of scale Capital / investment requirements Customer switching costs Access to industry distribution channels The likelihood of retaliation from existing industry players.
Threat of Substitutes The presence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on: Buyers' willingness to substitute The relative price and performance of substitutes The costs of switching to substitutes
Bargaining Power of Suppliers Suppliers are the businesses that supply materials & other products into the industry. The cost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then in theory the company's industry is less attractive. The bargaining power of suppliers were high when: There are many buyers and few dominant suppliers 13
There are undifferentiated, highly valued products Suppliers threaten to integrate forward into the industry (e.g. brand manufacturers threatening to set up their own retail outlets) Buyers do not threaten to integrate backwards into supply The industry is not a key customer group to the suppliers
Bargaining Power of Buyers Buyers are the people / organizations who create demand in an industry. The bargaining power of buyers is greater when: There are few dominant buyers and many sellers in the industry Products are standardized Buyers threaten to integrate backward into the industry Suppliers do not threaten to integrate forward into the buyer's industry The industry is not a key supplying group for buyers
Intensity of Rivalry The intensity of rivalry between competitors in an industry will depend on: The structure of competition - for example, rivalry is more intense where there are many small or equally sized competitors; rivalry is less when an industry has a clear market leader The structure of industry costs - for example, industries with high fixed costs encourage competitors to fill unused capacity by price cutting competitors to fill unused capacity by price cutting Degree of differentiation - industries where products are commodities (e.g. steel, coal) have greater rivalry; industries where competitors can differentiate their products have less rivalry Switching costs - rivalry is reduced where buyers have high switching costs - i.e. there is a significant cost associated with the decision to buy a product from an alternative supplier Strategic objectives - when competitors are pursuing aggressive growth strategies, rivalry is more intense. Where competitors are "milking" profits in a mature industry, the degree of rivalry is less
14
Exit barriers - when barriers to leaving an industry are high (e.g. the cost of closing down factories) - then competitors tend to exhibit greater rivalry. (Source: tutor2u, 2003).
2.3. PREVIOUS STUDIES OF APARTMENT COMPETITIVE STRATEGIES Study by Romano (2000) mentioning that in the past, swimming pools, exercise centers, and other amenities were used to help position a property against its competition. Now, high-end-properties are using such technology-based amenities as high-speed Internet access and home theaters to provide market differentiation. In a sign of the times, last year Summit Properties hired an individual with a background in information technology for the newly created position of Intelligent Community Project Manager. This individual provides a liaison between technology providers, development, and property management functions, keeping the real estate company up-to-date on new technologies it should consider for residents. BRE Properties Inc. offers residents of its communities a broadband Internet product - Velocity HSI - that is point-to-point, T1 speed, 1 megabyte or better, and video quality. The degree of interest in and acceptance of high-tech amenities, however, depends on more than resident demographics; it also varies by market. In addition to providing Internet access, many companies are finding value in providing Internet content to their residents. At present most of the demand is coming from the luxury apartment segment (Romano, 2000). While Flahive (1998) researched the Princeton at Mt. Vernon, one of the most high-tech apartment communities in Massachusetts. Each of the 144 apartments offers high-speed Internet access and 6 telephone lines. Smart features cannot make an old apartment community new again, but they can make it more competitive. To determine whether smart features are appropriate for an older apartment community, property developers and managers should consider both practicality and market conditions. Because most smart features involve rewiring, it is impractical to add them unless you are already opening the walls. Market factors to consider include location, corporate furnished suites, differentiation from the competition, and image. The addition of smart features in relatively inexpensive during a rehabilitation but can give potential residents an entirely different perspective on a property (Flahive, 1998)
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Previous studies by Rossiter of Colliers International Indonesia regarding the Jakarta Apartment Market for Strata-Titled Apartments mentioning that at the end of fourth quarter 2001, strata-titled apartment supply remained stable at approximately 24,295 units. 320 new units entered the market from the completion of Muara Indah Apartments in North Jakarta on August 2001. Over the next 12 months, 486 units are expected to enter the market from 2 projects within the CBD area. Uncertainty locally has seen an increasing number of upper class Indonesians looking off shore to invest in residential property. Occupancy rates for strata-titled apartments reflect some optimism in the market with an increase of 0.6% to 78.9%. Supply At the end of 2001, strata-titled apartments in Jakarta totalled approximately 24,295 units. The only new stock on the market came from the completion of the Muara Indah Apartments in Pluit, North Jakarta. This apartment development commenced in 1997, taking 4 years to complete due to the financial crisis that struck in 1998. It was completed in August 2001, adding 320 units to the total Jakarta supply. According to the distribution of strata-titled apartments in Jakarta, Central Jakarta (including the CBD area) accounts for 46% of the total supply, while West Jakarta accounts for 22% of the total supply. The other municipalities in Jakarta, which are North Jakarta, South Jakarta and East Jakarta, account for 19%, 12% and 1% of the total strata-titled apartment units, respectively. Cumulative and Annual Supply in terms of the number of strata-titled developments in Jakarta, 22 projects or 30% are located in South Jakarta, according to a Colliers International survey. These developments are mostly small-scale, averaging 122 units per project for a total of 2,704 units. Among the large-scale developments in Jakarta, Taman Rasuna Apartments with 3,070 units in the CBD area is the biggest, followed by Taman Anggrek Apartments with 2,824 units in West Jakarta and Wisma Gading Permai Apartments with 1,021 units in North Jakarta. In South Jakarta and the CBD area, the majority of occupants are resident expatriates, while in the other regions (specifically in West and North Jakarta), the dominant occupants are local citizens using strata-title apartments for temporary living or for investment. Based on a Colliers survey, there are approximately 22 residential projects with a total of 13,000 units throughout Jakarta that have been put on hold due to the financial crisis. Those are equal to 54% of the total strata-titled apartment units in Jakarta. No new development is forecasted to enter the strata-titled market in Jakarta over the remainder of 2002. However, several apartment developments have reached the finishing 16
stage in their construction. These include the Four Seasons Apartments (Tower 3 and 4) and Pavilion Park Apartments (Tower 2 and 4). Completion of these two developments in 2002 would add an additional 486 units, increasing total supply by 2% to 24,781 units. Demand of the fourth quarter of 2001 witnessed the return in sales activity for stratatitled apartments in Jakarta. Occupancy rates increased 0.6% to 78.9% during the fourth quarter. Approximately 4,800 strata-titled apartment units remain un-sold throughout Jakarta. The low level absorption indicates that many people are still reluctant to invest in the local market due to the slow progress in macro economic recovery that has created an insecure business environment. Historical Occupancy Rates for Strata-Titled Apartments despite sluggish local market conditions, there remains pent-up demand to invest with local investors investigating offshore markets as an alternative to investing in the Jakarta market. Countries such as Singapore, Australia and Malaysia have provided better investment conditions resulting in an increasing out flow of capital from Indonesia. Malaysia has gained more popularity within the last six months due to its average apartment unit price being relatively low compared to average unit prices for apartments in Singapore and Australia. The usual motive for Indonesians to purchase apartments outside the country is to provide accommodation for a family member who works or studies abroad. Looking at the overall market performance of strata-titled apartments in Jakarta, premium grade apartments currently enjoy a relatively high occupancy rate of approximately 87% compared to the middle class apartments with the average level of 70%. Premium grade apartments are mostly located in the CBD area, and many of them provide the service of a luxury hotel. Price and Capital Values as of the forth quarter of 2001, the average selling price per square meter for strata-titled apartments in Jakarta was approximately US$2,450 for premium grade apartments and Rp 6,400,000 for secondary grade apartments. Despite the limited number of transactions within the market, selling prices actually increased 3% to 7% at some apartments. Other developers, however, have maintained or lowered asking prices in order to attract potential buyers in the low demand market. With an increasing expectation that IBRA and other creditors will offer increasing numbers of residential apartments to the market in 2002, we forecast that selling prices for secondary grade apartments will decline over the coming 12 months, while selling prices for premium grade apartments are likely to remain stable despite the possible entry of Four Seasons Tower 3 and 4 to the market. 17
Residential Apartments with no additional supply of leased apartments within this quarter, the total stock level remained at approximately 6,207 units. 100 new units from the completion of Golf Pondok Indah Apartments will enter the market within the third quarter. Since many apartment developers implemented flexible marketing strategies, there was no clear distinction between those apartments for sale and those for lease. It is now an increasing trend for expatriates to lease apartments instead of houses due to security and personal safety concerns in Jakarta. The average occupancy for leased apartments stood at the level of 69.3%, a 2.3% increase compared to previous quarter. The rental rates are expected to remain stable, while service charges are expected to increase 5% to 10% following the increase in the cost of public utilities Supply as at fourth Quarter 2001, the supply of leased apartments in Jakarta remained unchanged at approximately 6,207 units. From the total number of leased apartments throughout Jakarta, approximately 2,600 units or 43% are developed as serviced apartments. Due to market demand and in order to anticipate growing trends, more leased apartments are now providing in-house services including daily maid assistance as an optional feature for occupants. The CBD area has the largest number of leased apartments in Jakarta with approximately 2,532 units or 42% of the total supply. North and East Jakarta combined have only 2% of the total stock. Compared to the other municipalities in Jakarta, South Jakarta is more progressive in apartment developments as investors still consider it to be an area with good prospects. According to a Colliers International survey, there are approximately 1,400 units of leased apartments planned for construction in the South Jakarta area that remain on hold due to the crisis. According to historical data, there was no significant development within the past two years. Since strata-titled types dominated the apartment market in Jakarta, many developers were reluctant to built rental apartments due to the lengthy investment return. However, when the demand for strata-titled apartments started to decline in 1997 following the economic crisis, many developers adopted flexible marketing strategies by converting some of their strata-type units into leased apartments in order to generate cash flow. Over the next 12 months, 100 new units will enter the Jakarta leased apartment market. Golf Pondok Indah Apartments, which are located in South Jakarta, are scheduled to launch 50 new units in March and another 50 new units in July. Demand increasing concerns over personal safety and security has fuelled the trend among expatriates to lease apartments instead of houses. Such a trend is reflected in the 18
growing demand for leased apartments over the past 12 months. Besides adding further security measures for tenants, developers and owners of strata-titled residential property will also provide a host of attractive and flexible leasing terms, including a 12-month lease period. Concerns about the recent floods at some exclusive residential areas such as Kemang and Cipete are expected to further increase the trend among some wealthy families and expatriates to move into leased apartments with service as they are available at daily and weekly rates. Also, some property developments in Mega Kuningan, such as the Wisma Asiatic office building, are expected to increase demand for leased apartments in the Kuningan and Casablanca areas. As at fourth quarter 2001, Colliers recorded an approximately 2.3% increase in occupancy of leased apartments in Jakarta, putting the average occupancy rate at 69.3%. Premium grade leased apartments continue to out-perform the market with current occupancy above 85%. Despite the slight increase in market performance, a total of 1,905 units remain vacant, approximately 70% of which are secondary grade apartments. Colliers predicts that occupancy levels will continue to improve over the next 12 months, with occupancy rates expected to rise above 70%.
CHAPTER III RESEARCH METHODOLOGY
19
3.1. INTRODUCTION The study will focus on business-level intended competitive strategy within the apartment industry. Since the strategy professed by company executives may differ from the strategy that a company actually implements, intended strategies may differ from realized strategies (Snow and Hambrick 1980).
3.2. PROBLEM STATEMENT With a large number of new developments due to come on the market in 2005 and in coming years, Jakarta will remain a hot market for apartments. But outside Jakarta, particularly in Singapore and Australia, developers are also boosting their efforts to persuade wealthy Indonesians to invest in the apartment markets in those countries. The effort to attract Indonesian buyers has paid off, with Kompas daily reporting that Indonesians constitute the biggest overseas buyers of Singapore property, followed by people from Malaysia, Brunei Darussalam, Hong Kong and Shanghai. However, optimism is still high among Indonesian developers that they will not lack buyers. Investors have suffered losses in the Singapore apartment market due to a drop in property prices of between 35 percent and 45 percent, and low rental income. Many predispositions of people to select the representative apartment which might have several considerations such as close to business activities, shopping centre and the like become the problem for the development of competitive strategy for the apartment industry in Jakarta especially at the Sudirman CBD in order to fight the competition. .
3.3. RESEARCH OBJECTIVES The objectives of this research are:
20
1. To outline the situation and highlight the developments in the apartment industry at the CBD Jalan Sudirman in Jakarta in particular for both new companies and leading companies which have previously built and developed several apartments at that area. 2. To discuss the various challenges confronting competitive advantages in the apartment industry at the CBD Jalan Sudirman in Jakarta. 3. To establish suitable strategies that apartment industry at the CBD Jalan Sudirman in Jakarta should adopt to ensure their future viability. 3.4. THEORETICAL FRAMEWORK The proposed model will adopt the Porters Five Forces which influence the competitive advantage of industry. 3.4.1. Variables Variables will consist of five dimensions: 1. Threat of New Entrants 2. Threat of Substitutes 3. Bargaining Power of Suppliers 4. Bargaining Power of Buyers 5. Intensity of Rivalry New entrants to apartment industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in apartment industries. The presence of apartment substitute can lower apartment industry attractiveness and profitability because they limit price levels. Suppliers are the businesses that supply materials & other products into the apartment industry. The cost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then in theory the apartment 's industry is less attractive. Buyers are the people / organizations who create demand in apartment industry. The intensity of rivalry between competitors in apartment industry will depend on the structure of competition, the structure of industry costs and degree of differentiation, switching costs, strategic objectives and exit barriers. Realized strategies may be the result of deliberate strategic decisions (intended strategies) or they may reflect reactions to industry changes that have no underlying strategic 21
basis. However, focusing on intended strategy allows the use of strategic self typing by top management personnel. The perceptions and opinions of this group largely determine the organizations strategy (Snow and Hambrick 1980). Focusing on intended strategy also allows strategic change in the industry to be predicted. The Theoretical Framework will follow Porters 5 forces that were identified into variables. 3.4.2. Assumptions The assumption of this research is that The Five Dimensions of the research are the factors that influence the competitiveness of Apartments in Jakarta. The reason is that there is a relationship between competitors within apartment industry, potential competitors, suppliers, buyers and alternative solutions to the problem being addressed. Many researchers used the five-forces model as a basic structure and built on it with concepts from the works of many other authors. 3.4.3. Limitations The research will limit the study only for Apartments at CBD Jalan Sudirman Area. The time limitations for primary data gathering will cover the period of February 2006 only. While secondary data obtained from 2000 2006.
3.5. RESEARCH QUESTIONS Based on the research ideas, the research questions have been generated at the beginning of the research process. The idea of this research is to set clear conclusions in order to answer these research questions based on the data collected. The research questions are: 1. What are the forces which influence the apartment industry competitiveness at CBD Jalan Sudirman in Jakarta? 2. What are the detailed action plans to for CBD Jalan Sudirman Apartments? 3. What are the specific priorities for the CBD Jalan Sudirman Apartments to ensure their future viability? 22
The research questions above were used as a base from which to write a set of research objectives. The research objectives below are evidence of the clear sense of purpose and direction in conducting this research.
3.6. RESEARCH METHODOLOGY The research methodology is one the most important part of this research. It consists of set of rules and procedures that require consistent applications. It determines the tools and techniques by which the researcher systematically arrive at the solution of the statement of the problem and objective of the study. 3.6.1 Research Design Research design instrument were using questionnaire. Quantitative strategic data were gathered via an 18-item measure adapted from Dess and Davis (1982, 1984)6. The measure developed by Dess and Davis were judged to have met the three concerns in strategic factors as presented by Thomas and Venkatraman (1988): 1. 2. 3. It captured (with minor changes) the basis of competition in the industry; It had a strong relationship to existing strategic topologies-specifically, Porter The works of Dess and Davis (1982, 1984) provide evidence of the validity and
(1980); and reliability of the measure.
Table 3 1 Dimension Threat of New Entrants
Variables and Measurements Code NE1 NE2 Indicator Demand of new apartments Investment requirements to build apartment Competitive Threat Factors Factors
Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 5 Ordinal 1 - 5
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NE3 NE4 Threat of Substitutes TS5 TS6 TS7 Bargaining Power of Suppliers PS8 PS9
Customer switching costs Access to marketing channels (broker, property agents) Consumer's willingness to substitute The relative price and performance of substitutes The costs of switching to substitutes There are many demand and few dominant suppliers There are undifferentiated, highly valued products
Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5
Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5
PS10 Suppliers threaten to integrate forward into the industry PS11 Consumers do not threaten to integrate backwards into supply Bargaining Power of Buyers PB12 There are few dominant consumers and many apartment supply. PB13 Products are standardized PB14 Consumers threaten to integrate backward into the industry PB15 Apartment suppliers do not threaten to integrate forward into the consumers
Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5
Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5
Table 3 1 Intensity of Rivalry
(continued) IR16 The structure of competition (rivalry is less when apartment industry has a clear market leader) IR17 The structure of apartment industry costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting)
Ordinal 1 - 5 Ordinal 1 5
Ordinal 1 - 5
Ordinal 1 5
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IR18 Degree of differentiation apartment industries where standard of living increased
Ordinal 1 - 5
Ordinal 1 5
Source: Dess G.G. and P.S. Davis (1984), Porters (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy Management Journal. 27(3); 467-487. Minor changes were made in the measure to ensure applicability to the apartment industry. The content validity of the resulting measure were checked through a review by knowledgeable Apartment management personnel. Table 3-1 lists the variables included in the measure. The measure were incorporated into a questionnaire that also included questions concerning the category of respondents (management, tenant or broker). The 18 items were included in the measure and were rated for their importance to the companys competitive strategy using 5-point Likert-type scales that ranged from, 1 = Not Important to 5 = Extremely Important. The questionnaire also will ask recipients to indicate how the threat of competition using 5-point Likert-type scales that ranged from, 1 = Not threatening to 5 = Extremely threatening, which they expected each item to be in their companys future (next 5 years) competitive strategy.
3.6.2. Data Collection Instruments The population of Jakarta apartment market (as of first Quarter 2005) had a total number of 32,372 apartment units (Colliers, 2006). While the sample were used in this study consisted of the managements, tenants and brokers from 5 Apartments management. Sample companies were identified through a review. The reason of taking the samples from CBD Jalan Sudirman is that this area represent 34% of location preference as shown in Figure 1-2. This non-probabalistic approach to company selection were resulted in a purposive (judgment) sample and limits traditional probability-based extrapolations of the study results to the entire industry. However, it was felt that given limited research resources, strategic change within the industry could best be investigated by examining larger, influential firms. Purposive sampling also will allow the sample to be controlled for the potentially confounding effects of extreme variations in company scope and resources (Dess and Davis 1984). Non-probability samples are commonly used in marketing research (Green and Tull 1978). In addition, a non-
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random, purposive sample of large firms within an industry can outperform randomzed sampling schemes for estimating industry parameters. Survey techniques were used to gather data from the sample firms. In multi industry companies, the questionnaire were directed to the management of the business unit apartment, tenants and brokers. In some cases, it will not possible to contact the top executive, and senior marketing / sales people were substituted. The questionnaire were conducted during March 2006 for five sample companies located at the Jalan Sudirman CBD. The questionnaire consists of the five forces influencing the competitive strategy of apartment in CBD Jalan Sudirman (see Appendix A). The questionnaires were returned by the time analysis began. Five sample of Apartment companies consist of: 1. Pavilion Apartment 2. Batavia Apartment 3. Istana Sahid Apartment 4. Plaza Apartment 5. Sudirman Tower Condominium The samples include the category of apartment type: fully-furnished service apartment, unfurnished and fully-furnished without service. 3.6.3. Data Analysis Methods The result from the questionnaire were put into a calculation to obtain mean value of each variable for competitiveness factors and threat factors. The mean values became the source for the gap analysis. The formula for mean factors are as follow7: Mean value of competitiveness Xi - Xn = -----------------n Yi - Yn = -----------------n = Xi - X = Yi - Y
Mean value of threat Gap of competitiveness Gap of threat

7
26
Where: Xi - Xn n X Y = value of competitiveness scale = number of samples = total means of Xi - Xn = total means of Yi - Yn Yi - Yn= value of threat scale
Competitive factors and threat factors were developed to find gaps on attributes and categories. The scores then were put into the graph, to determine the gaps among attributes and categories in relation to the competitive advantage value. The gaps of each attribute in each quadrant of the graph were identified, and evaluated in comparison with the performance standards, to find the appropriate reasons why the gaps occur and thus determine the basis for operating strategy formulation. The operations strategy were formulated based on the results whereby each result was translated into strategic actions to meet the performance standards. The strategy will allow apartment industry to continuously upgrade their performance.
CHAPTER IV DATA AND ANALYSIS
4.1. DESCRIPTIVE DATA ANALYSIS Condominium developments grew in number. During the reviewed quarter, five new projects comprising 1,940 units were launched in the market with completion dates between
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fourth quarter of 2005 and 2007. Four additional projects consisting of 1,950 units will also be launched at the beginning of the second quarter. Dua Mutiara Group led by Tan Kian livened up the Jakarta market with their fourthprestigious project development The Ritz Carlton-Pacific Place situated in the strategic Sudirman CBD. This mixed-use development offers 80-luxury strata-titled living units together with office space, a hotel and a retail center. The development compliments the groups previous portfolios such as Sudirman Place, Airlangga (Mega Kuningan) and May Flower (Sudirman), all located in the CBD area. By this quarter, the existing condominium stock, now registered at 32,372 units, combined with the above future projects, will raise the Jakarta cumulative supply to 67,080 units in 2007. See Appendix C. Figure 4-1. Existing Apartment Supply Jakarta, 1Q 2005 West Jakarta 26% East Jakarta 0% North Jakarta 22% CBD 25% Central Jakarta 17% South Jakarta 10%
Source: Colliers International Indonesia, Research Department, 2005. The supply rate grew by 1.8%, compared to the last quarter, due to the completion of 32 units at Daksa Residences and 532 units at Mediterania Palace Residence (Tower A). Accordingly, this increased Central and South Jakartas portion. However, West Jakarta still maintained the largest share thanks to the units available at Taman Anggrek Apartment and Mediterania Garden Residence (Tower 1) contributing more than 2.500 units each. Cll calculated that the Jakarta apartment market is set to average an annual growth of 28.9% during second quarter 2005 2007 period. Significant growth of 56.3% is expected to materialize in 2006, bringing an additional 21.385 units onto the market and resulting in a
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rocketing cumulative supply of more than 59.300 units. The 2006 annual supply were recorded as the highest annual supply ever in the markets history. The demand for apartment considering the investment factors such as capital gains and yields from leasing units remain middle class buyers primary objective when purchasing. In contrast, the trend among the wealthy classes is to purchase luxury units for collection purposes. Figure 4-2. Future Apartment Supply Jakarta, 2007
West Jakarta 25% East Jakarta 1% North Jakarta 27%
CBD 23%
Central Jakarta 16% South Jakarta 8%
Source: Colliers International Indonesia, Research Department, 2005. Strategic location coupled with price and design concept also influenced buyers decisions. These factors drove sales at Airlangga, Sudirman Residence, The Peak, Mediterania Gajah Mada and Mediterania Lagoon. The average take-up rate of both existing and future developments was slightly down by 0.9% to 74.5% in this quarter. Around 91% of the existing units were sold, of which 74% were occupied, leaving 8.417 units vacant. South Jakarta enjoyed good occupancy at an average of 85%, as expatriates remained an almost captive market. West Jakarta also experienced better occupancy rates (83%) due to limited supply and most owners wishing to also occupy the residence. Meanwhile, information gathered from projects under-construction, suggests an absorption rate of 51.9%. Availability of strategic land for residential developments within the city is becoming increasingly rare and the few existing sites are cost prohibitive. Yet, the worsening traffic congestion has shifted the trend to high-rise living. The phenomenon of a suppy-driven 29
situation is amplified by the need to have a comfortable home with good proximity to the workplace and city entertainment spots. Furthermore, many projects offer attractive pricing, comparable to a landed house in the outskirts of Jakarta.
Table 4-1. Market Price of Apartment Types
Market Seg men t Low
Average Asking Price (per sq m)* Rupiah US Dollar
Project
< 6 million
< 631.6
Taman Semanan Indah, The City Resort Residence, Teluk Intan Mediterania Residence,
Middle-Low
<= 6 million 10 million
< = 631.6 1.052.6
Boulevard The View
Executive Residence, Puri Middle-Up > 10 million 15 million Upper Luxury > 15 million 20 million > 20 million > 1.052.6 1.578.9 > 1.578.9 2.105.3 > 2.105.3 Garden Mansion Menara 7 Gading, Senayan Residence, Somerset Berlian, Setiabudi Residence The Peak, SCBD Suite,
Pacific Place Airlangga, Oakwood Premier Cozmo
Another trend is locating mid-low apartment developments next to campuses. For example, Mediterania Garden Residence 1 in West Jakarta has very close access to Tirsaksi and Tarumanegara Universities. Another on going project, Margonda in Depok, aims to capture student tenants and offer an alternative to traditional student accommodation at an affordable price. Students looking for a lifestyle factor may seek this type of apartment instead of the more traditional rented house. Apartment prices varied according to location & accessibility, furniture & interior design, building quality, unit size, level & view. The name of the apartment or hotel operator was also an important factor influencing price, especially among strata serviced developments run by international hotel operators. Within the reviewed quarter the average asking price in the market did not show any significant changes and ranged from Rp5 million up to Rp24 million/sq m and beyond. Some 30
developments offered semi-furnished units with average asking prices of between Rp10 million and Rp13 million/sq m such as The Summit Apartment in Kelapa Gading and Sommerset Berlian Residence in Permata Hijau. Price increments are predicted for the next two quarters though, in anticipation of continued high fuel costs, which in turn impact construction costs. Generally, the average asking price in the market is divided according to class segmentation as shown follow. 4.2. INFERENTIAL DATA ANALYSIS To measure the competitive advantage of apartment industry was used gap analysis comparing the standard to performance from the perceptions of management, tenants and brokers from selected apartment samples. The score points which were modified from Porter 5 Forces and Competitive Strategy were calculated as weight to the response of respondents. The gap analysis was analyzed by comparing the means of competitive threats indicators and competitive advantage indicators using compare means method apartment industry competitive threats and the competitive advantage of achievement of apartment industry for Apartment industry in Sudirman CBD. The competitive advantage-competitive threats matrix was then developed to obtain visualized pattern of competitive advantage and competitive threats of attributes among school. The matrix contains four quadrants of positions. The quadrant of axis was resulted from the difference between the actual competitive advantages against the mean of all competitive advantage of apartment industry. Table 4 2 Gap Analysis Indicator Competiti Threat ve Factors Factors 4.20 4.13 3.73 3.87 channels (broker, 2.67 3.33 3.07 3.80 3.80 1.80 3.00 2.73 Dimension Code Threat of New Entrants
NE1 Demand of new apartments NE2 Investment requirements to build apartment NE3 Customer switching costs NE4 Access to marketing property agents)
Threat of Substitutes
TS5 Consumer's willingness to substitute TS6 The relative price and performance of substitutes
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TS7 The costs of switching to substitutes Bargaining Power of Suppliers PS8 There are many demand and few dominant suppliers PS9 There are undifferentiated, highly valued products PS10 Suppliers threaten to integrate forward into the industry PS11 Consumers do not threaten to integrate backwards into supply Bargaining PB12 There are few dominant consumers and many Power of apartment supply. Buyers PB13 Products are standardized PB14 Consumers threaten to integrate backward into the industry PB15 Apartment suppliers do not threaten to integrate forward into the consumers Intensity of IR16 The structure of competition (rivalry is less Rivalry when apartment industry has a clear market leader) IR17 The structure of apartment industry costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting) IR18 Degree of differentiation apartment industries where standard of living increased
3.07 3.87 3.33 3.80 3.27 3.60 2.93 2.53 2.33 3.67 3.93
2.67 3.13 2.60 2.60 2.27 2.93 2.93 2.53 2.33 3.67 4.00
3.80
3.50
The quadrant of ordinate was resulted from the difference between the actual competitive threats perceived by management against the mean of all competitive threats of apartment industry. The details as follow: Quadrant I Quadrant II Quadrant III Quadrant IV : high competitive advantage and high competitive threats : low competitive advantage and high competitive threats : low competitive advantage and low competitive threats : high competitive advantage and low competitive threats
In order to get the data for each quadrant, the value of variable scores from the discriminant factors were identified. Data were obtained by averaging the responses of specific variable. The result is shown in Table 4 2 and Table 4 - 3.
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Table 4 - 3. The Gap Score and Matrix Position
Dimension
Code
Competitive Measure 4.20 3.73 3.87 2.67 3.33 3.07 3.07 3.87 3.33 3.80 3.27 3.60 2.93 2.53 2.33 3.67 3.93 3.80 3.39
Difference Competitive - Means 0.81 0.34 0.48 (0.72) (0.06) (0.32) (0.32) 0.48 (0.06) 0.41 (0.12) 0.21 (0.46) (0.86) (1.06) 0.28 0.54 0.41
Threat Measure 4.13 3.80 3.80 1.80 3.00 2.73 2.67 3.13 2.60 2.60 2.27 2.93 2.93 2.53 2.33 3.67 4.00 3.50 3.02
Difference Threat Means 1.11 0.78 0.78 (1.22) (0.02) (0.29) (0.36) 0.11 (0.42) (0.42) (0.76) (0.09) (0.09) (0.49) (0.69) 0.64 0.98 0.48
Matix Position I I I III III III III I III IV III IV III III III I I I
Threat of New Entrants Threat of Substitutes Bargaining Power of Suppliers Bargaining Power of Buyers Intensity of Rivalry
NE1 NE2 NE3 NE4 TS5 TS6 TS7 PS8 PS9 PS10 PS11 PB12 PB13 PB14 PB15 IR16 IR17 IR18
1.50 Quadrant II Quadrant I NE1 The gap analysis for competitive advantage was obtained by subtracting the competitive NE2 advantage value with the competitive advantage means. While the gap analysis for competitive NE3 1.00 threats were obtained by subtracting the competitive threats value with the competitive threats NE4 means. The result of the calculations was then put into graphical matrix to TS5 visualize the quadrants as shown in Figure 4 1. Details 0.50 in Appendix B. shown TS6 TS7 PS8 Figure 4 3 Competitive advantage-Competitive threats Matrix of Attributes PS9 0.00 PS10 -1.50 -1.00 -0.50 0.00 0.50 1.00 PS11 PB12 -0.50 PB13 PB14 PB15 -1.00 IR16 IR17 Quadrant III Quadrant IV IR18 -1.50 33
Threat
Competitive
NE TS PS PB IR
= Threat of New Entrants = Threat of Substitutes = Bargaining Power of Suppliers = Bargaining Power of Buyers = Intensity of Rivalry
NE - Threat of New Entrants New entrants to apartment industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in apartment industries. Key barriers to entry include Economies of scale Capital / investment requirements Customer switching costs Access to industry distribution channels The likelihood of retaliation from existing industry players.
TS - Threat of Substitutes
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The presence of apartment substitute can lower apartment industry attractiveness and profitability because they limit price levels. The threat of apartment substitute depends on: Buyers' willingness to substitute The relative price and performance of substitutes The costs of switching to substitutes
PS - Bargaining Power of Suppliers Suppliers are the businesses that supply materials & other products into the apartment industry. The cost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then in theory the apartment 's industry is less attractive. The bargaining power of suppliers were high when: There are many buyers and few dominant suppliers There are undifferentiated, highly valued products Suppliers threaten to integrate forward into the industry (e.g. brand manufacturers threatening to set up their own retail outlets) Buyers do not threaten to integrate backwards into supply The industry is not a key customer group to the suppliers
PB - Bargaining Power of Buyers Buyers are the people / organizations who create demand in apartment industry. The bargaining power of buyers is greater when: There are few dominant buyers and many sellers in the industry Products are standardized Buyers threaten to integrate backward into the industry Suppliers do not threaten to integrate forward into the buyer's industry The industry is not a key supplying group for buyers
IR - Intensity of Rivalry The intensity of rivalry between competitors in apartment industry will depend on: The structure of competition - for example, rivalry is more intense where there are many small or equally sized competitors; rivalry is less when apartment industry has a clear market leader
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The structure of industry costs - apartment industries with high fixed costs encourage competitors to fill unused capacity by price cutting competitors to fill unused capacity by price cutting
Degree of differentiation - apartment industries where products are commodities (e.g. low level housing) have greater rivalry; industries where competitors can differentiate their products have less rivalry
Switching costs - rivalry is reduced where buyers have high switching costs - i.e. there is a significant cost associated with the decision to buy a product from an alternative supplier
Strategic objectives - when competitors are pursuing aggressive growth strategies, rivalry is more intense. Where competitors are "milking" profits in a mature industry, the degree of rivalry is less
Exit barriers - when barriers to leaving an industry are high (e.g. the cost of closing down factories) - then competitors tend to exhibit greater rivalry.
4.3. DISCUSSION AND FINDINGS Based on the result of the Competitive advantage - Competitive threats Matrix of attributes, the management perception on the attributes in 1. Quadrant I indicate high competitive advantage and high competitive threats are: Threat of new entrants : Demand of new apartments, Investment requirements to build apartment, Customer switching costs. Bargaining power of suppliers: There are many demand and few dominant suppliers. Intensity of rivalry: The structure of competition (rivalry is less when apartment industry has a clear market leader), The structure of apartment industry costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting), and Degree of differentiation apartment industries where standard of living increased. 2. There are no attributes in quadrant II low competitive advantage and high competitive threats. 3. Quadrant III indicates low competitive advantage and low competitive threats includes: Threat of new entrants: Access to marketing channels (broker, property agents), Threat of substitutes: Consumer's willingness to substitute, The relative price and performance of substitutes, The costs of switching to substitutes, 36
Bargaining power of suppliers: There are undifferentiated, highly valued products, Consumers do not threaten to integrate backwards into supply, Products are standardized, Consumers threaten to integrate backward into the industry
Bargaining power of buyers: Apartment suppliers do not threaten to integrate forward into the consumers.
4. Quadrant IV indicates high competitive advantage and low competitive threats are: Bargaining power of suppliers: suppliers threaten to integrate forward into the industry. Bargaining power of buyers: There are few dominant consumers and many apartment suppliers. The Strategy is designed to help apartment industry use an integrated approach to organizational competitive advantage management. The Strategy are built upon the following set of interrelated variables. These values and concepts, were drawn in figure below, are embedded beliefs and behaviours found in apartment industry. They are the foundation for integrating key requirements within a results-oriented framework that creates a basis for action and feedback. The gap analysis was then transformed into an operational strategy for detailed implementation for first priority, second priority, and third priority.
Figure 4 4
Operations Strategy to Increase Competitiveness
No.
Action Plan
FIRST PRIORITY : BEWARE OF HIGH THREATS Threat of new entrants : - Demand of new apartments, - Investment requirements to build apartment, - Customer switching costs Bargaining power of suppliers: - There are many demand and few dominant suppliers Intensity of rivalry: - The structure of competition (rivalry is less when apartment industry has a clear market leader), - The structure of apartment industry costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting), - Degree of differentiation apartment industries where standard of living increased.
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SECOND PRIORITY: INCREASE COMPETITIVE ADVANTAGE Threat of new entrants: - Access to marketing channels (broker, property agents) Threat of substitutes: - Consumer's willingness to substitute - The relative price and performance of substitutes, The costs of switching to substitutes Bargaining power of suppliers: - There are undifferentiated highly valued products - Consumers do not threaten to integrate backwards into supply - Products are standardized - Consumers threaten to integrate backward into the industry Bargaining power of buyers: - Apartment suppliers do not threaten to integrate forward into the consumers THIRD PRIORITY: MAINTAIN HIGH COMPETITIVE ADVANTAGE Bargaining power of suppliers: - suppliers threaten to integrate forward into the industry Bargaining power of buyers: There are few dominant consumers and many apartment supply
Competitive Advantage of Apartment Industry in CBD Jalan Sudirman
CHAPTER V CONCLUSION AND RECOMMENDATION
5.1. CONCLUSION The apartment industry in CBD Jalan Sudirman is a very good investment according to the most investors. To ensure that the industry continues to expand, sustaining its competitive edge remains the most important challenge for the industry. To achieve this, the company need to improve on the efficiency and productivity to reduce cost, explore opportunities to diversify 38
the income base and widen the demand base for Apartment industry, create innovative marketing approaches as well as encourage greater integration among the sub-sectors of the industry. Major determinant factors for operations strategy to increase competitive advantage for Private Apartment industry in CBD Jalan Sudirman is categorized by level of urgency: First Priority by fully aware of High Threats consist of Threat of new entrants: Demand of new apartments, Investment requirements to build apartment, Customer switching costs; Bargaining power of suppliers: There are many demand and few dominant suppliers; Intensity of rivalry: The structure of competition (rivalry is less when apartment industry has a clear market leader), The structure of apartment industry costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting), Degree of differentiation apartment industries where standard of living increased. Second Priority by increasing Competitive Advantage such as: Threat of new entrants: Access to marketing channels (broker, property agents); Threat of substitutes: Consumer's willingness to substitute, The relative price and performance of substitutes, The costs of switching to substitutes; Bargaining power of suppliers: There are undifferentiated highly valued products, Consumers do not threaten to integrate backwards into supply; Products are standardized, Consumers threaten to integrate backward into the industry; Bargaining power of buyers: Apartment suppliers do not threaten to integrate forward into the consumers Third Priority: Maintaining High Competitive Advantage such as Bargaining power of suppliers: suppliers threaten to integrate forward into the industry; Bargaining power of buyers: There are few dominant consumers and many apartment supply.
5.2. RECOMMENDATION The recommendation especially for investors that in consonance with the changing needs of liberalization, the structure of apartment regulation liberalized. Expatriate now can live in Indonesia with better living and, investments in Indonesia have also been liberalized on a selective basis, thus providing new market opportunities in apartment industries. However, the continued opportunities the long-term depend on the ability to balance the local supply/demand situation in order to safeguard the interest of the huge investment business in Indonesia with the changing needs of manufacturers and consumers in the global market.
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First Priority by fully aware of high threats by paying more attention to the available facilities to become more attractive than competitors. Prior to investing in the apartment development, it is important for the developers to pay attention regarding the theme of facilities in the apartment which is unique and different from competitors. Facilities that should be attention are like wireless broadband internet, caf, restaurant, mini market where consumers might quickly visit it in order to meet something required. Another important factor to be aware of high threats by paying attention to its management. Management is essential thing in performing something. It is important for customers to know the credibility of management of an apartment before choosing it. Second Priority by increasing Competitive Advantage such as being careful before deciding to sell the units. If the consumers have found the apartment tailor-made to various considerations, such as: Choose the position of floors in order to reduce the noises coming from outside of the apartment. It will be better to sell unit of the apartment, which has mostly only one studio room, since it is selling fast. Paying attention to the view from inside of apartment to outside of it. The company should consider whether there are available furniture inside of apartment unit, if not, whether customers might buy it individually; or the developers have already appointed one of particular company to handle about it. Third Priority: Maintaining High Competitive Advantage such as knowing the plan and concept of apartment development in developing its apartment. Considerate the service charge of apartment where consumers should not forget to considerate its service charge. They have to multiply it on the basis of stipulated per metre square, with the wide of apartment unit.
5.3. FUTURE WORKS Future works can be established by extending the coverage of the research not only in the CBD Jalan Sudirman, but also other parts in Jakarta. The Future research can be developed to answer the questions how can answer the challenge of industry to be able to continue to expand, sustaining its competitive edge. Future research should be able to answer how to improve on the efficiency and productivity to reduce cost, explore opportunities to diversify the income base and widen the demand base for Apartment industry, create innovative marketing approaches as well as encourage greater integration among the sub-sectors of the industry.
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REFERENCES
Business Insight (2003). http://www.brs-inc.com/porter.asp, retreived Jan 11, 2006. Colliers International Quarterly research Report, 1Q 2005, Jakarta, 2005. Dess G.G. and P.S. Davis (1982). An empirical examination of competitive advantage. West, St. Paul, 237 p. Dess G.G. and P.S. Davis (1984). Porters (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy Management Journal. 27(3); 467-487. Flahive, Terence F. (1998). The Wired Apartment, Journal of Property Management. Chicago: May/Jun 1998.Vol.63, Iss. 3; pg. 40, 3 pgs Green and Tull 1978 Green, P. E., and D. S. Tull. (1978). Research for Marketing Decisions, New Jersey, IL: Prentice-Hall. Jakarta Java Kini Magazine, February Edition, 2006.
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Khalik, Abdul (2006). Condo, apartment supply stagnant, prices slightly rise, The Jakarta Post, Jakarta http://www.skyscrapercity.com/showthread.php?t=138839 retreived Jan 15, 2006. Porter, Michael E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. 557p. Porter, Michael E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press. Romano, Ellen (2000). Live wires: High-tech apartment amenities Journal of Property Management. Chicago: May/Jun 2000.Vol.65, Iss. 3; pg. 20, 4 pgs Rudijanto (2006). Jakarta apartment outlook bright despite threat of oversupply, The Jakarta Post, Jakarta, http://www.skyscrapercity.com/showthread.php?t=138839 retreived Jan 15, 2006. Rossiter, Richard (2003). Colliers International Indonesia, Research and Consultancy Manager for Colliers International Indonesia. Snow, C.C. and D.C. Hambrick, (1980). Measuring Organizational Strategies: Some Theoretical and Methodological Problems, Academy of Management Review, October 1980. Thomas H. and N. Venkatraman (1988). Research on strategic groups: Progress and prognosis. Journal of Management Study, 25(6): 537-555. Tutor2u (2003). http://www.tutor2u.net/business/strategy/porter_five_forces.htm retreived Jan 11, 2006.
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APPENDIX A. QUESTIONNAIRE Name of apartment Respondent category No : : a. management b. tenant Competitive Factors *) c. broker Threat Factors **)
Kindly check the number representing the current condition in the Apartment for Competitive Factors and Threat Factors. Indicator
1 2 3 4 5 1 2 3 4 5 Not Not so Netral Importa Extremel Not Not so Medium Threateni Extremely Importa Importa nt y Threateni Threateni ng Threatenin nt nt Impotan ng ng g t
Threat of New Entrants 1 2 3 4 Demand of new apartments Investment requirements apartment Customer switching costs to build 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5
Access to marketing channels (broker, property agents)
Threat of Substitutes (Other Living Mode) 5 6 7 Consumer's willingness to substitute The relative price and performance of substitutes The costs of switching to substitutes 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5 1 1 1 2 2 2 3 3 3 4 4 4 5 5 5
Bargaining Power of Apartment Suppliers 8 There are many demand and few dominant suppliers 1 2 3 4 5 1 2 3 4 5
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*) Competitive Factors : the advantages of your company compare to other competitors **) Threat Factors : the advantages of the competitors which threatening the performance of your company 9 There are undifferentiated, highly 1 2 3 4 5 1 2 3 valued products 10 Suppliers threaten to integrate forward into the industry 11 Consumers do not threaten to integrate backwards into supply Bargaining Power of Consumers 12 There are few dominant consumers and many apartment supply. 13 Products are standardized 14 Consumers threaten to backward into the industry integrate 1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 1 1 1 1 2 2 2 2 3 3 3 3 1 1 2 2 3 3 4 4 5 5 1 1 2 2 3 3
4 4 4
5 5 5
4 4 4 4
5 5 5 5
15 Apartment suppliers do not threaten to integrate forward into the consumers Intensity of Rivalry
16 The structure of competition (rivalry is 1 2 3 4 5 1 2 3 4 5 less when apartment industry has a clear market leader) 17 The structure of apartment industry 1 2 3 4 5 1 2 3 4 5 costs (apartment with high fixed costs encourage competitors to fill unused capacity by price cutting) 18 Degree of differentiation apartment 1 2 3 4 5 1 2 3 4 5 industries where standard of living increased Please rate your importance to the apartments competitive strategy using scales ranged from, 1 = Not Important to 5 = Extremely Important. 44
Also indicate how the threat of apartment competition using scales that ranged from, 1 = Not threatening to 5 = Extremely threatening APPENDIX B. DATA COLLECTION RESULTS
Competitive Factors No NE 1 2 3 4 TS 5 6 7 PS 8 9 10 11 PB 12 13 14 15 IR 16 17 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 AVG 1 2 3 4 Threat Factors 5 6 7 8 9 10 11 12 13 14 15 AVG
5 5 4 3 4 4 3 4 3 3 3 4 4 3 3 4 4 5
4 4 3 2 4 3 4 4 3 3 3 4 4 3 3 4 4 4
5 4 4 3 4 4 4 4 3 3 3 4 4 3 3 4 4 4
4 4 4 3 4 4 4 4 3 3 4 3 4 4 4 4 4 4
5 4 4 3 4 4 4 4
4 4 3 2 4 4 4 3
4 4 4 5 4 3 3 3 3 3 3
4 4 4 4 4 3 3 4 3 4 3 4 4 3 3 4 4 4
3 4 5 2 4 4 3 3 3 4 3 4 4 3 2 4 4 3
4 3 4 2 3 4 3 4 4 4 2 5 4 4 2 5 4 4
4 3 4 2 2 2 2 4 4 5 4 3 1 1 2 3 4 4
4 3 3 2 2 2 2 4 3 5 4 3 1 1 1 3 4 4
5 3 4 3 2 1 2 5 4 4 3 4 1 2 1 3 5 4
4 4 4 2 2 2 3 4 4 5 4 3 1 1 1 4 4 4
4 3 4 2 3 2 2 4 4 5 4 3 1 1 1 3 4 3
4.20 3.73 3.87 2.67 3.33 3.07 3.07 3.87 3.38 3.92 3.31 3.64 2.93 2.50 2.29 3.71 4.00 3.86
4 4 4 2 4 4 4 4 2 3 3 4 4 3 3 5 5 4
4 4 3 2 4 3 3 4 4 3 3 4 4 3 3 4 4 4
4 4 4 4 4 3 3 3 4 3 3 4 4 4 3 4 4 4
4 4 4 2 4 4 3 4 3 3 2 4 4 3 3 4 4 4
5 2 4 2 4 4 4 3 2 2 3 4 4 3 3 4 4 4
5 5 4 2 4 4 4 4
4 4 4 2 4 4 3 4 3 3 3 3 4 4 3 5 4 4
4 4 4 2 3 3 3 4 3 3 3 3 4 3 3 4 5 3
4 2 2 2 4 3 3 3 2 2 3 4 3 3 3 4 4 3
4 4 4 1 4 3 3 3 2 4 2 4 4 3 2 4 4
4 4 4 1 1 1 1 2 2 2 1 1 1 1 1 3 4 3
3 4 4 1 1 1 2 2 2 2 2 1 1 2 1 2 3 3
5 4 3 2 2 1 2 2 3 2 1 2 1 1 2 3 4 3
4 5 5 1 1 1 1 3 2 2 1 1 2 1 1 3 4 4
4 3 4 1 1 2 1 2 2 2 1 2 1 1 1 3 4 3
4.13 3.80 3.80 1.80 3.00 2.73 2.67 3.13 2.57 2.57 2.21 2.93 2.93 2.50 2.29 3.71 4.07 3.54
3 4 3 3 4 3 3
4 4 3 3 3 4 4
45
APPENDIX C. List of Future Condominium Projects (as per March 2005) No Development Location Region Total units
60 117 854 125
Status
Expected Completion Year
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Airlangga Apartment Bellagio Mansion Bellagio Residence Bellezza de Casa (Tower 1) Kelapa Gading Square (City House) Mediterania Gajah Mada Residence Mediterania Palace Residences (Tower B-C) Menara 7 Gading (Tower A-C) Pakubuwono Residence Pantai Mutiara Suites Pinnade Pondok Indah Square (POINS) SCBD Suite Sudirman Mansion Sudirman Residence at Mayflower Taman Pluit Kencana Taman Semanan Indah (Tower Anggrek) Bellezza de Casa (Tower 2) Capital Residence, The Casablanca Mansion City Lofts City Resort Residence, The Dipenogoro, The Eminence at Essense Dharmawangsa (Tower 1) Grand SOHO Slipi Hollywood Residence Icon, The Kelapa Gading Square (City Home) Kelapa Gading Square (French Walk) Kemang City (Tower A-BC)
Mega Kuningan Mega Kuningan Mega Kuningan Permata Hijau Kelapa Gading Gajah Mada Kemayoran Kalapa Gading Kebayoran Baru Pluit Sudirman Lebak Bulus Sudirman CBD Sudirman Sudirman Pluit Cengkareng Permata Hijau Sudirman CBD Casablanca Mas Mansyur Cengkareng Menteng Kebayoran Baru Slipi Gatot Subroto Setiabudi, Sudirman Kelapa Gading Kelapa Gading Kemayoran
South Jakarta CBD CBD South Jakarta North Jakarta Central Jakarta Central Jakarta North Jakarta South Jakarta North Jakarta CBD South Jakarta CBD CBD CBD North Jakarta West Jakarta South Jakarta CBD CBD CBD West Jakarta Central Jakarta South Jakarta West Jakarta CBD CBD North Jakarta North Jakarta South Jakarta
Finishing Construction Construction Construction
2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006
32 Construction 1,152 Finishing 1.065 Construction 617 Construction 639 34 242 150 Construction Construction Construction Construction
70 Finishing 216 Finishing 60 Construction 44 Construction 134 Construction 125 Construction 264 638 442 5.000 Construction Construction Announced Construction
59 Construction 156 Announced TBD Announced 624 Announced 300 Announced 3.750 Construction 1.400 Construction 720 Announced
46
31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61
May Flower Mediterania Boulevard Residence Mediterania Lagoon Mediterania Marina Residence (Tower B) Menara 7 Gading (Tower D-G) Oakwood Premier Cozmo Pallazo Peak, The (Tower B-D) Pearl Garden Ritz Carlton, The-Pacific Place Salemba Residence Senayan City Senayan Residence Somerset Berlian Residence Sudirman Park Taman Rasuna Block 18 & 19 View Executive Residence, The Apartemen at CBD Pluit Eminence at Essense Dharmawangsa (Tower 2) Esperence at Essense Dharmawangsa Gold Coast Apartment (Tower Brisbane) Mediterania Garden Residences 2 Mediterania Marina Residence (Tower C) Patria Park Puri Garden Mansion Setiabudi Residence Sudirman Square Summit, The Teluk Intan Westin Residence Kraton
Sudirman Kemayoran Kemayoran Ancol Kelapa Gading Mega Kuningan Kemayoran Setiabudi, Sudirman Gatot Subroto Sudirman CBD Salemba Asia Afrika, Senayan Patal Senayan Permata Hijau Mas Mansyur Kuningan Kemayoran Pluit Kebayoran Baru Kebayoran Baru Pantai Indah Kapuk Tanjung Duren Ancol Cawang, DI Panjaitan Kembangan Kuningan Sudirman Kelapa Gading Teluk Gong Thamrin Thamrin
CBD Central Jakarta Central Jakarta North Jakarta North Jakarta CBD Central Jakarta CBD CBD CBD Central Jakarta South Jakarta CBD South Jakarta CBD CBD Central Jakarta North Jakarta South Jakarta South Jakarta North Jakarta West Jakarta North Jakarta East Jakarta West Jakarta CBD CBD North Jakarta North Jakarta CBD CBD
54 Construction 1.056 Construction 360 Construction 558 Construction 872 Construction 22 Ground Breaking 534 Construction 310 Construction 181 Ground Breaking 80 Announced 715 Announced 169 Construction 369 Construction 185 Construction 1.400 Construction 600 To be Announced 442 Construction 744 Construction 156 Announced 208 Announced 176 Land Clearing 3.000 Construction 527 Construction 422 Announced 200 300 89 390 1.500 Construction Construction Pending Construction Construction Re-Scheduled 100 To be Announced
2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2007 2008
47
TABLE OF CONTENT
Acknowledgement Abstract Table of Content
i ii iv
THE ANALYSIS OF APARTMENT INDUSTRY COMPETITIVE STRATEGY AT CBD JALAN SUDIRMAN .....................................................................................................................1
48
IN JAKARTA.................................................................................................................................1 CHAPTER I INTRODUCTION..........................................................................................................................2 1.1. BACKGROUND........................................................................................2 1.2. PROBLEM STATEMENT........................................................................4 1.3. RESEARCH OBJECTIVES ......................................................................5 1.4. THEORETICAL FRAMEWORK.............................................................6 1.5. RESEARCH QUESTIONS........................................................................7 1.6. RESEARCH METHODOLOGY...............................................................8 ...........................................................................................................................8 1.6.1. Research Design .....................................................................................8 Data Collection..................................................................................................8 Data Analysis Methods......................................................................................8 CHAPTER II LITERATURE REVIEW.............................................................................................................10 2.1. COMPETITIVE STRATEGY.................................................................10 2.2. FIVE FORCES OF PORTER MODEL ..................................................12 2.3. PREVIOUS STUDIES OF APARTMENT COMPETITIVE STRATEGIES.................................................................................................15 CHAPTER III RESEARCH METHODOLOGY.................................................................................................19 3.1. INTRODUCTION....................................................................................20 3.2. PROBLEM STATEMENT......................................................................20 3.3. RESEARCH OBJECTIVES ....................................................................20 3.4. THEORETICAL FRAMEWORK...........................................................21 3.5. RESEARCH QUESTIONS......................................................................22 3.6. RESEARCH METHODOLOGY.............................................................23 Source: Dess G.G. and P.S. Davis (1984), Porters (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy Management Journal. 27(3); 467-487......................25 3.6.2. Data Collection Instruments.................................................................25 3.6.3. Data Analysis Methods..........................................................................26 CHAPTER IV DATA AND ANALYSIS.............................................................................................................27 4.1. DESCRIPTIVE DATA ANALYSIS.......................................................27 4.2. INFERENTIAL DATA ANALYSIS.......................................................31 4.3. DISCUSSION AND FINDINGS.............................................................36 The Strategy is designed to help apartment industry use an integrated approach to organizational competitive advantage management. The Strategy are built upon the following set of interrelated variables...............................37 CHAPTER V CONCLUSION AND RECOMMENDATION...........................................................................38 5.1. CONCLUSION.........................................................................................38 5.2. RECOMMENDATION............................................................................39 The recommendation especially for investors that in consonance with the changing needs of liberalization, the structure of apartment regulation liberalized. Expatriate now can live in Indonesia with better living and, investments in Indonesia have also been liberalized on a selective basis, thus providing new market opportunities in apartment industries. However, the continued opportunities the long-term depend on the ability to balance the local supply/demand
49
situation in order to safeguard the interest of the huge investment business in Indonesia with the changing needs of manufacturers and consumers in the global market.......................................39 5.3. FUTURE WORKS...................................................................................40 REFERENCES..............................................................................................................................41 Threat of New Entrants....................................................................................43 Threat of Substitutes (Other Living Mode).....................................................43 Bargaining Power of Apartment Suppliers.....................................................43 Intensity of Rivalry..........................................................................................44
50

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THE ANALYSIS OF APARTMENT INDUSTRY COMPETITIVE STRATEGY AT CBD JALAN SUDIRMAN IN JAKARTA

By Sri Yulianingsih Sumantri (Indonesia)

Colliers International Quarterly research Report, 1Q 2005, Jakarta, 2005.

other family 8% second home 13% living 48%

Source: Colliers International Indonesia, Research Department, 2005.

Kompas, Eksekutif Muda Pembeli Apartemen, May 06, 2004

CBD Jalan Sudirman 34%

Source: Colliers International Indonesia, Research Department, 2005.

variables as explained further in Chapter III.

Data Analysis Methods

Mean value of competitiveness

Mean value of threat Gap of competitiveness Gap of threat Where: Xi - Xn n X Y

= value of competitiveness scale = number of samples = total means of Xi - Xn = total means of Yi - Yn

Yi - Yn= value of threat scale

CHAPTER II LITERATURE REVIEW

Finance and Control

Research and Development

Factors Internal to the Company

Factors External to the Company

Personal Values of the Key Implementers

Broader Societal Expectations

CHAPTER III RESEARCH METHODOLOGY

3.3. RESEARCH OBJECTIVES The objectives of this research are:

(1980); and reliability of the measure.

Table 3 1 Dimension Threat of New Entrants

Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5

Ordinal 1 - 5 Ordinal 1 - 5 Ordinal 1 - 5

Table 3 1 Intensity of Rivalry

IR18 Degree of differentiation apartment industries where standard of living increased

Mean value of threat Gap of competitiveness Gap of threat

CHAPTER IV DATA AND ANALYSIS

Central Jakarta 16% South Jakarta 8%

Market Seg men t Low

Average Asking Price (per sq m)* Rupiah US Dollar

<= 6 million 10 million

< = 631.6 1.052.6

Boulevard The View

Pacific Place Airlangga, Oakwood Premier Cozmo

Table 4 - 3. The Gap Score and Matrix Position

Operations Strategy to Increase Competitiveness

Competitive Advantage of Apartment Industry in CBD Jalan Sudirman

CHAPTER V CONCLUSION AND RECOMMENDATION

Access to marketing channels (broker, property agents)

Expected Completion Year

Finishing Construction Construction Construction

Source: Colliers International Indonesia, Research Department, 2005.

Acknowledgement Abstract Table of Content

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