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Alternative Strategy

to Solve Business Sustainability Problem


Case Study : PT GO-JEK Indonesia

Prepared for

Professor Dr. Djoko Susanto, M.S.A., C.A.


Lecturer of
Leadership Communication

Prepared by

Diah Tantri - 15/387249/PEK/20799


Franklin Delano -
Ahmad Prasetya
Ramadiany Fitrianina 14/376711/PEK/20446
Wira

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Faculty of Economic and Business
Universitas Gadjah Mada
Jakarta
2017

January 2318, 2017


Jl. Dr. Saharjo No. 83
Samator Building
Manggarai, Tebet, South Jakarta 12180
January 18, 2017
December 25, 2016

Mr. Nadiem Makarim


CEO of
PT GO-JEK Indonesia
JL. Kemang Selatan Raya 99B
Jakarta Selatan 12730

Dear Mr. Nadiem Makarim

Bbased on the report requested proposal research in on Nnovember 2016 for we made some
competitive sustainable strategies to solve sustainability business problems that due date on
January 2017. As an alternative strategy to solve the problem GO-JEK that will be discussed
are:we reported that strategies for PT Go-Jek Indonesia that should implement are:
1. Getting market share and customer loyalty;
2. Able to do Cost efficiency and getting rider loyalty.

1. How to improve GoO-Jek advertise brand awareness?


2. DoesWhether the consumerostumer price sensitivity of the motorcycle taxis thatis high?
3. DoesWhether the consumerostumer have to be committed commit in one in the motorcycle
taxi driversprovider?
4. How is Go-Jekgojek strategy to improve drivers loyalty?assessment indicators used instead of
cash flow and profit margins?

However, PT GoO-JekEK Indonesia should do conduct more research to analyze on alternative


Determining Effective Sstrategies to be adoptedfrom another perspective. So that,the
formulization to crafting strategy will be comprehensive.
Ideally, we need evaluation and In establishing the development our strategy frequently, so that
we can choose of alternative strategies at the right time, but which is not to uncertainty to
identify the conditions is challenging all company. However, we can evaluate market as initial
strategy to can affect the internal and external environment determines the Corporate Business
Development foras alternative strategies GoO-JeEK Indonesia.

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This information in this report came form print and online source, as well as interview Go-Jeks
riders. We appreciate for welcoming us to do this research.Contains information from external
factors Opportunities and Threats. We also develop questions using a questionnaire distributed to
drivers and users.

After that, Thank you for the opportunity to conduct this research. We appreciate the chance to
apply our knowledge to helping sustainability of PT. GoO-JekEK Indonesia to and solve the
business sustainability problemcompetition lately.

If you have any questions about this report, please let us know ask. Thank you.

Sincerely, Sincerely, Sincerely,

Diah Tantri Franklin Delano Ramadiany Fitrianina


diahtantri87@yahoo.com Fdelano11@gmail.com rfitrianina@gmail.com
Sincerely, Sincerely,

Ahmad Prasetya Wira


ahmadprasetya.r@gmail.co wira.zaza@hotmail.co.id
m

Sincerely,
Sincerely, Sincerely,

Diah Tantri
diahtantri87@yahoo.com Ramadiany Fitrianina
rfitrianina@gmail.com
Table of Content

Letter of Transmittal...............................................................................................i1
Executive Summary................................................................................................iii
Introduction.............................................................................................................1
Problem.............................................................................................................1
Purpose and Scope............................................................................................2
Limitation..........................................................................................................2
Company Profile.....................................................................................................3
Analysis...................................................................................................................3
Brand Awareness...............................................................................................3
Price Sensitivity................................................................................................4
Driver/Rider Loyalty.........................................................................................5
Conclusion and Recommendation..........................................................................6
For Improving Brand Awareness......................................................................6
For Improving Customer Loyalty.....................................................................6
For Improving Driver Loyalty..........................................................................7

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Alternative Strategy to Solve Sustainability Problem
Case Study : PT. GO-JEK Indonesia

Executive Summary

Formulated strategy from marketing and human resources of PT. GO-JEK Indonesia as the is
most important to should adopt ancraft effective alternative strategy to be that able to sustain its business
in Indonesia. An alternative strategy formulated through the identification of external and internal
environment of the company. Then using questionnaires to indentification is also made the competitive
pressures in industry by using questionnaries.

Increasing in smartphones user created new market that called e-commerce. Many start-up
companies that competition to give the solution with their own business to serve market needs.
Transportation is significant economic driver that can moved economy rate. Conventional transportation
has moved to online since market need public information as their consideration to choose their
preferences.

There are three big motorcycle taxi provider in market. PT Go-Jek Indonesia, PT Grab Indonesia,
and PT Uber Indonesia Technology that has competitive to winning in the market. So that, in the first
time, price war be a general strategy that taken by company to penetrate market and It leads to more
option for consumer.
So that, to winning strategy in competitive industry from Marketing and Human Resources
perspective, PT Go-Jek Indonesia, should implement strategy:
1. Stay with their identity as their core business;
2. Using various channels to promotion, especially by internet, like social media to increase brand
awareness for another city expansion.
3. Construct Go-Jek cost structure properly and make its cost or capital spending more efficient;
4. Aware on competitors price and react it;
5. Encourage service quality
6. Give a gift or something that can improve their loyalty.
7. Give rider more commission and benefit than competitors.

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8.

To crafting an effective alternative strategy PT. GO-JEK Indonesia should:

INTRODUCTIONINTRODUCTION

The largest company,bigger company has the more problems and difficulties to be solve.difficult
it is to resolve the problem when in trouble . This is what PT. GoO-JekEK Indonesia had faced. In May
2016, Go-Jek launched Go-pPay which is an additional service to compliment and to ease customers from
traditional transaction. By using Go-Pay, the consumer will get some discount up to 50% for Gor-Ride,
Go-cCar, Gos-Send, and Go-fFood services. In addition to discount, the consumer will also get free
delivery fee for some partnered restaurant. users will get a discount of up to fifty percent when a payment
transaction through Gopay and for some partnered restaurants in Go-food the delivery fee will be free
with Go-pay. Very obvious that this is a strategic move to encourage the use Gojo-Jek and their digital
payment.
Competitive pricing, reliability, and generally good service quality, has attracted increasing
numbers of customer to Go-Jek. After it launched, On June 2015, the flat rate promo is ten thousand
rupiah for all services, the search for Go-Jek has soared and it has become the most searched brand
compared to the famous personal ride-booking app, such as GrabBike, BlueJek and Uber.

The rising popularity of Go-Jek has been rapidly rising since it launched. However, there are
many threats that faced by Go-Jek in their market. But, the existence of Go-Jek not escape from
problems. Flourishing in Jakarta also makes Go-Jek media spotlight. The polemic emerged from the
others motorcycle taxi online. They feel that their income reduced since many competitors are exist.

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Problem

In August 2016, Goj-Jek has injection for 7.2 trillion rupiah from global consortium consisting of
a number of new investors, including KKR, Warburg Pincus, Farallon Capital, and Capital Group
Markets.nvestor previously, namely Sequoia India, Northstar Group, DST Global, NSI Ventures, Rakuten
Ventures, and Formation Group , also participated in funding this session.The new investment will be
used to grow the scale of operations and the quality of its services, including motorcycle taxi, food
delivery, courier, e-wallet (Go-Pay), and car called Go-Car.
Not long after the Go-Jek get fresh cash backa new funding from investors, Go-Jek provide tariff
reduction from twelve thousand to four thousand rupiah and not included when we paid using Go-Pay
which receive twenty percent to three thousand rupiah. But one thing
So that, we can conclude, this business has tough competition, provide benefits to customers.
Price war is general strategic that taken by company to penetrate market. It leads to more option for
consumer. However, this strategic most often strike industries where there is both heavy competition and
several comparable services. Many motorcycle taxi service use cutting price with discount or others
promo to running this strategy and if we learn from price wars that happened in other industry such as
telecommunication, car taxi and aviation industry.,
Ssomeday Government will take preventive action to avoid worse situation that probably affect
by price wars. Beside of the strategy that can be use to compete their rival, as a pioneer of motorcycle
taxi service in Indonesia, Go-Jek should take another strategy to face government regulation.
In other side, Another problem in Go-jJeks problem is how to make increase their a loyalty of
driver. We know that there are many competitors which provide the same model of Go-Jek. So, it is
important to have competitive strategy better than the competitors.

Purpose and Scope

The purpose of this report is to recommend an alternative strategy for GoO-JekEK Indonesia to
improve and sustaining their business in Indonesia.
In this report, we will focus on the result of questionnaire which . the results of the questionnaire
we distributed to drivers and users of Go-Jek. We will discuss Tthe result of the discussion will be
used to make an alternative strategy related to the problems. gojek gojek can provide an idea of the
problems that companies face.

Assumption

Limitations

This report depends on online and questionnaiere sources. However we havent directly obtain
information from Go-Jek internal management therefore the data and information which is presented in
this research would mostly in driver and consumer point of view.
Beside of that, due to limitation of time we cant give comprehensive perspective as our based to
give alternative solution in whole companys function. However, we used market and human resources
perspective as tools to give recommendation about Go-Jeks Strategy.

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Criteria
COMPANY PROFILE

Go-Jek is a social enterprise that partners with a group of experienced and trustworthy ojek
drivers to deliver a onestop-shop convenience service for Indonesians. It was founded in 2011 by
Nadiem Makarim and is based in Jakarta, Indonesia. The idea comes up when he chat with his close
Ojek driver that said 70% of an his work time are waiting for customer to come and use his service, so
thats when he want to proceed his mission to make an ojek driver more productive. Go means a fast and
proactive services. Nadiem wanted to create a brand with a fast and easy value that can be deliver and
understandable directly to his customers.
Now, Go-Jek is one of the fastest growing and most visible technology start-up in Indonesia.
All of Go-Jek services available in JABOTABEK area, Bandung, Bali, Surabaya, Makassar, Yogyakarta,
Medan, Semarang, Palembang, and Balikpapan with plans to expand further in the coming year.

ANALYSIS
AND RECOMENDATION
Strategy of Marketing and Human Resources Perspective

The data that we got from questionnaires shown:


1. Brand Awareness
Brand awareness is the probability that consumers are familiar about the life and
availability of the product. It is the degree to which consumers precisely associate the brand with
the specific product. Building brand awareness is essential for building brand equity. It includes
use of various renowned channels of promotion such as advertising, word of mouth publicity,
social media like blogs, sponsorships, launching events, etc.
In this research, we use 20 samples for users, and when we test of Go-Jek Brand
Awareness the result is Go-Jeks main business relate within technology that connected in
Internet. and this is matched with our data, all of the samples customer know about Go-Jek and
almost of 8065% of Go-Jeks customer know about Go-jek customers know Go-Jek from
Internet. . That mean, Go-Jek customer is internet users and this is matched because Go-
Jeks main business relate within technology that connected in Internet. (see figures 1)

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Figure 1
How the customers know about Go-Jek

65% Customer know about Go-Jek from Internet

Kerabat Kerabat; Internet


35%

Internet; 65%

figure 1 How the customers know about Go-Jek


source: questionnaire data

It is important to know how the customers know about Go-Jek, because we can focus on
what media would effectively use to increase brand awareness for another city expansion. .
2. Price sensitivity
Price sensitivity is the degree to which the price of a product affect costumers purchasing
behaviors. When the product or services is unique or has few substitutes, then the costumers have
less price sensitivity, vice versa.
Competition in Motorcycle taxi provider is competitive, there are two big player other
than Go-Jek that provide motorcycle taxi service in Indonesia, Grab and Uber. Based on
experience and ability of their company, they also give attractive price for their service. For the
customer, they can decided what service that would use easily, due to switching cost that will paid
is slight. In other side, the other factors that can improve the intention to use Go-Jeks Business is
availability of driver in their social live. It shown on our data that set availability on second place
after price. (see figure 2)
fFigure 2
The reason of why the customer using motorcycle tsxi provider

45% customer using motorcycle taxi provider because of the tarif

30.00%

25.00%

45.00%

source: questionnaire data figure 2 The reason of why the customer using
motorcycle tsxi provider

Knowing the degree of price sensitivity is important to know customer loyalty. If the
substitute of this product is high but the customer keep use their usual product, therefore they are
loyal customer.
3. Driver/rider Loyalty
The Riders areis the key partner of Go-Jeks business, so that they should maintain their
rider well. It will be competitive strategy to have enough amount and spread it on Go-Jeks target
Market.
Based on interview with the drivers, they get remuneration from three instrument. Thats
profit sharing, bonus and incentive. First, profit sharing of amount the order between the driver
and company is 80:20. Second, every riders get an order from application, and then if the distance
under six kilometers, the riders will get 1.5 poin and if up form that the riders will get 2 point.
The accumulation from its to get the bonus which is the indicator performance the riders. If the
riders reach ten poin, they will get Rp.20.000. If the riders reach 12 point, they will get Rp
40.000. And if the riders get 14 point, they will get Rp.80.000. Third, the riders get an incentive
from each kilometers on the order. They said, incentive was Rp 2.500 perkilometers.
Based on our data, almost 89% of driverrrider is consider about commission, after that
commission system ranked on 2nd place that will be consider them. Benefit gained by the driver
in PT. Go-Jek Indonesia also provides convenience to drivers in installments home with KPR

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BTN program, an insurance program that can be enjoyed by one family, service eyeglasses, and
installment motorcycle.
Conclusion and RecommendationsCONCLUSION and RECOMMENDATION

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Go-Jek need strategically decision to winning competition in market, due to market condition and
competition is high competitive. So that, our research suggest for alternative strategy of Go-Jeks
marketing and Human Resources function is:

1. For Improving Brand Awareness:


Stay with their identity as their maincore business;
In last of 2016, Go-Jek has strategy to spread their main business in others activity, such as:
Go-Massage, Go-Pulsa, Go-Auto, Go-Clean, and Go-Glam. All of those are not related with
their slogan an Ojek for every need. They must focusing ojek driver as their main service
provider as their core business out there is to keep their identity as Pioneer of Motorcycle
Taxi Provider in Indonesia.

Using various channels to promotion, especially by internet, like social media to


increase brand awareness for another city expansion.
2. For improving Customer Loyalty
Construct theirGo-Jek cost structure properly and make its cost or capital
spending more efficient;
We think business model that owned by Go-Jek is complicated, simply, the tariff that they set
is 2.500/km (if customer use Go-Pay) and 5.000/km (if not), and they must pay their partner
(motorcycle rider) within amount 12.000/km . and its only for Go-Ride service. Iits more
interesting on another service, like Go-Food, there is Go-Food Partner that given free
price for delivery food that joined in Go-Food Partner (and Go-Jek not mark up the
prices that shown on Application). But, Go-Jek still paid their motorcycle rider (who
would deliver food) within 12.000;
In other side Inequality in portion of rider commission that should paid by Go-Jek to service
price as their revenue will suicide their business if capital structure that owned not good. So
that they need to re-design their revenue stream to minimize their financial risk.

Aware on competitors price and swift their price if it happened;


As the The main competitor of Go-Jek, Uber and Grab has experience and ability to control
their cost that will affect on their price. On 2014 until 2015, the price war has begun in
motorcycle taxi provider especially at Jakarta. the effect on Go-Jek is market share that first
owned by Go-Jak has move to their competitors.

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Encourage service quality
One of the service quality improvements is to encourage drivers attitude, performance, good
motorcycle and safety equipment as the cover of companys image. So, Go-Jek have to make
sure that the drivers has a good attitude, performance, good motorcycle and safety equipment
to make the customer feel comfort when using Go-Jek.
In other side, if we treat customer well, they can creat and use word of mouth properly, it can
help promoted Go-Jek services. We can see figure 1 as the proof.
Give a gift or something that can improve their loyalty.
Due to slight of switching cost that should paid by Customer, to get Loyalty in this market is
difficult. So that, Go-Jek need strategy that can hold their customer to minimize perceived
risk. Recently they launched a loyalty program called Go-Point that linked with Go-Pay.
Which is every transactions used Go-Pay will be got a Go-Point. The points that customers
collected can be redeems for a great prize such as, Apple Watch, iPhone 7, Macbook, etc
3. For improving Driver Loyalty
4.
Recently they launched a loyalty program called Go-Point. Every
transactions by Go-Pay will be rewarded a points that will be collected to
the Go-Point. The points that customers collected can be redeems for a
great prize such as, Apple Watch, iPhone 7, Macbook, etc Give rider a
more commission and rider benefit than competitors.
Due to there are big competitors of Go-Jek that had similar services business and
also need rider as their assets to running their business, Go-Jek should give more
commission and other benefit than their competitors. Health benefit like insurance for
rider and their family member will increase their loyalty to the company.