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INDOFOOD

Putra Edi Utomo


186970
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1. Introduction

PT. Indofood Sukses Makmur Tbk widely known as INDOFOOD is a producer of various
types of food and beverages based in Jakarta, Indonesia. This company was officially
established in 1990 under the name of PT Panganjaya Intikusuma. But in 1994 this company
change Their name from PT. Panganjaya Intikusuma to PT. Indofood Sukes Makmur Tbk.
Indofood has one famous product named “INDOMIE”. Indomie is an instant noodle product
that now already widely known in Indonesia. More than 20 years PT Indofood Sukses Makmur
Tbk introduced Indomie to domestic and international markets.

Figure 1. Indomie (Instant Noodle)

Besides Indomie, Indofood also produce a lot of product such as dairy products, food
seasonings, snacks, and special nutrients and foods. This kind of diversivication product helps
Indofood to expand their market in Indonesia because they can satisfied the daily needs of
Indonesian people.

Figure 2. Indoofood other products.


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2. Performance

Even though Indofood isn’t the only “player” in Indonesian food industry, Indofood can
keep up and increasing their performance from year to year. If we se from Figure 3 we can see
that every year Indofood’s Net Sales keep increasing. In 2013 Indofood Net sales value was
55,62 Trillion Indonesian Rupiah, this net sales increasing trend keep happened. Therefore in
2017 Indofood’s Net Sales value touched 70,19 Trillion Indonesian Rupiah.
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Net Sales

2013 2014 2015 2016 2017

Figure 3. Indofood 2013-2017 Net Sales (in Trillion of rupiah) (Indofood, 2017)

3. Success Factor
If we see the annual report of Indofood 2017, they don’t only want to become market leader
in this sector but also become total food solution business. Indofood in this case builds their
business from upstream to downstream to increase efficiency and reduce the production costs
they incur. They did it by build their own facilities, acquisition, or cooperating with companies
starting from companies that supply raw materials needed by Indofood. For example, to make
the instant noodle (Indomie) they gain the raw materials from Bogasari one of their sub
division that produce wheat flour, they did it by acquired Bogasari back in 1995.

Distribution

Indofood, for distributing their product they have big chain of distribution line. Beside
distribute by them self, Indofood also do cooperate with third party in this case distributor and
wholesalers. By doing this things Indofood can market their product to all place in Indonesia
even in the small island. Moreover, Indofood also have Stock points located in areas with high
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retail store densities, including traditional markets, allow each distribution point to serve
consumers as close as possible and products are distributed in the shortest possible time.

Human Resources

Indofood believes that Human resources is one of the important elements in sustainable
success. These days Indofood has around 62 thousand workers. The company believes that
every employee has the capacity to excel and contribute to the success of not only the company,
but the nation as a whole. Indofood also will be providing various training programs throughout
the year, which not only improve the capabilities and capabilities of employees, but also form
a good ethical environment in Indofood companies. An ongoing training program will also
increase productivity and efficiency in order to help all divisions to maintain market share and
profit in an increasingly competitive market.

Diverse and Strong Products

Indofood has many types of products that make consumers unable to “escape” from
Indofood. Starting from Instant noodle the diverse brand portfolio includes brands such as
Indomie, Supermi, Sarimi, Sakura, Pop Mie, Pop Bihun and Mi Telur Cap 3 Ayam, serving all
market segments. These brands are known for their quality and have been well received by
consumers and won various awards for their brand excellence and status. Indofood runs sales
and marketing activities on the international market, to more than 60 countries such as the
Netherlands, South Korea, China, Philippines, Vietnam, Malaysia, Singapore, East Timor,
Australia, New Zealand, Papua New Guinea, Hong Kong, Jordan, Saudi Arabia, and the United
States

From the survey that held by Top Brand Awards (topbrand-award.com) in 2018
marketshare for Instant Noodles in Package is Indomie 77,8%, Mi Sedap 10,2%, Sarimi 4,4%
and Supermi 4,1%. From this result we can see that Indofood market share for this category is
quite big. In another category such as milk, snack, and beverage Indofood also has big market
share this mean Indofood product is market leader in Indonesian market.

Indofood also did join venture with PepsiCo which produces modern and traditional snacks
such as potato chips, cassava and tempeh, curly crackers, and shrimp crackers and extruded
snacks marketed with brands Chitato, Lays, Qtela, Cheetos and JetZ which have a strong
position in the market.
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Competitive Price

Indofood has business integration from upstream to downstream, so the cost advantage is
certainly obtained. They produce their own raw materials, process them, and distribute their
own products so as to create a low product cost and can always compete in the market despite
the pressure from substitute products produced and marketed by their competitors.

4. Strategic and development plan

Reconstructing Strategic

One of strategy that Indofood did in the past is reconstructing by separating the Instant
Noodles and Consumer Branded Products division into a new company called PT Indofood
Consumer Branded Product, Tbk in 2010. This Restructuring aims to achieve the effectiveness
of Indofood's operational performance and increase the value of the company. Ridwan (2016)
said that restructuring Indofood has succeeded in increasing the value of a very high company.
Increasing the value of the company does not provide prosperity for shareholders and is not
proportional to the company's growth in the long run.

Indofood revenue growth of 18.41% in 2010 will raise the value of the company as
reflected in the increase in the price per share intrinsic. Indofood cost efficiency levels better
than the food and beverages industry, but the ability to generate corporate profits are still below
the food and beverages industry (Ridwan, 2016).

Marketing Strategic

PT. Indofoof CBP Sukses Makmur Tbk. has a market orientation, where the production
carried out by the company is adjusted to market demand. The company always tries to meet
the needs of consumers, both in quantity and product quality. Besides the production of PT.
Indofood CBP Sukses Makmur Tbk. Also pay attention to product marketing to enable the
company to grow further. Various ways of promotional activities are carried out, such as
advertising both in print and electronic media and billboards. While sales promotion activities
include the distribution of gifts both directly and indirectly through lottery draws. Indofood
products are widely promoted through: (1) Interesting electronic and print media (2) Billboard
boards on big roads (3) Hold a competition to make jingles for Indomie (Patar and Isnaniah,
2018).
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Development and Expansion

Even though Indofood already quite big enough as a company they still want to do
expansion and development. Their development and expansion not only internal side but also
external by supporting smallholder businessman run their business also so in the future there
will be good symbiosis mutualism from this approach. Indofood from through their
Agribusiness department continue to partnerships with Palm Oil Smallholder Farmers the
result is some of these independent smallholders covering 1,902 hectares received RSPO
certification. This means these farmers can in provide good oil palm to Indofood and Indofood
can give them competitive price.

Indofood by joining Partnership for Indonesia Sustainable Agriculture (PISAgro) aims


to achieve 20% productivity improvement, 20% farmer welfare improvement and 20% GHG
emission reduction by 2020. To support these targets, PISAgro is collaborating with financial
institutions to extend business credits to farmers through the farmer cooperatives. Moreover,
since 2013, the Dairy division of the CBP Group has collaborated with a cow breeder
cooperative in East Java on a revolving cow scheme. Under the scheme, a partner breeder
would provide three calves to other breeders within a five-year period. The program is expected
to increase the dairy cow stock and relieve the growing domestic demand for fresh milk

5. Conclusion
In recent decades Indofood has transformed into a total food solutions company with
operations that cover all stages of the food production process, from production and processing
of raw materials to the final products available on retail shelves. Indofood achieved success in
such a way because it has five key factors for the company's success, namely Indofood's
integrated business from upstream to downstream, from raw material suppliers to distribution,
company-run strategies such as marketing strategies and product management strategies that
are very well done, quality human good technology, good corporate governance and corporate
structure, and almost all of its products are market leaders
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Bibliography

Indofood. 2018. Annual Report 2017.


https://www.indofood.com/uploads/annual/INDF%20FA%20AR%20Indofood%20
LOW%20RES%20Rev..pdf
Ridwan Ristyawan, Mochammad. 2016. Analysis of Restructuring Strategy Of PT Indofood
Sukses Makmur Tbk in Developing Company Life. Jurnal Ekonomi Bisnis dan
Kewirausahaan 2016, Vol. 5. No.1, 46-53
Patar Marbun, Isnaniah LKS. 2018. Marketing Strategy Done By Pt. Indofood Sukses
Makmur Tbk, Branch Of Medan, Indonesia. IOSR Journal of Economics and
Finance (IOSR-JEF) e- ISSN: 2321-5933, p-ISSN: 2321-5925. Volume 9, Issue 5
Ver. I (Sep – Oct. 2018), PP 30-35 www.iosrjournals.org