Mustika Ratu

NAVIGATING THROUGH SOCIAL

AND ECONOMIC CRISIS

Delfiana – Rahadi – Reski – Reza - Teguh

Vision

To be a market leader in manufacturing traditional cosmetics and herbal with high quality of natural ingredients.

Missions

constantly produces high quality products that are formulated by selected natural ingredients. Capture all segments.

BACKGROUND

1997 Mustika

Ratu

Focus on Domestic

Speed up Internation

al Expansion

Background

Mustika Ratu is Indonesia’s leading manufacturer of cosmetics and traditional herbal supplements.

Mustika Ratu was established by Mooryati Soedibjo in 1975.

The Company made initial public offering and recorded its shares in PT. Bursa Efek Jakarta in 1995.

In 1998 there was a financial crisis in Indonesia, resulted in unpredictable prospect.

Core Competencies

Natural product ingredientexpertise in formulation of jamus and

cosmetics

FinancialNet SalesCOGS 0.33%Gross Profit -0.33%Operating Expenses

Selling 4.72%General and Adm 1.12%

Total Operating Expenses 5.84%Income From Operations -6.17%Other Income (Expenses)

Gain on foreign exchange - net 12.89%Market Development -4.12%

Intereset Income - net -1.19%Donation to Yayasan Dana Sejahtera

Mandiri-0.02%

Gain on sale of property, plant and equipment

0.26%

Amortization of goodwill 0.00%Miscellaneous 0.18%

other income - net 7.98%Income Before Provision for Income Tax 1.81%

Provision For Income Tax 1.35%Income Before Minority Interest in Net Loss (Earnings) of Subsidiaries

0.47%

Minority Interest in Net Loss (Earning) of Subsidiaries

0.06%

Net Income 0.53%

Increase/Decrease

Net income slightly increase in unpredictable condition

STRONG FINANCIAL HEALTH

Situation of may 1998

Worst Financial Crisis

-Decrease buying power-Decrease Profit Margin

Sales Decrease

Emerging Opportunities for speeding international expansion

Corporate Culture

Based on their motto Mustika Ratu believes customer satisfaction is number one priority. Inside the company Mustika Ratu believes in intimacy workplace, so each employee can be familiar to each other. Beside that Mustika Ratu encouraged their employee to work with high integrity and professionalism.

Corporate Resource

Their founder closed with government people at the moment.

Has widespread distribution channel in Indonesia

Has several foreign operation in Southeast Asia

Has extensive brand products to cover wide segment

IFAS TABLE

Factor Weigth Rating Average Stdev CV Value

1 2 3 4 5

StrenghtHas widespread distribution channel in Indonesia

0.190476 5 4 4 3 5 4.2

0.748331 0.8 4

Has several foreign operation in Southeast Asia0.14285

7 4 3 3 2 4 3.20.74833

10.45714

3 3

Strong financial product0.09523

8 3 4 3 4 3 3.4 0.32381 2Has extensive brand products to cover wide segment

0.142857 4 4 4 4 4 4 0

0.571429 3

Weakness

Many her customer is lower middle income0.14285

7 3 3 4 3 4 3.40.48989

80.48571

4 3

Raw material dependency0.19047

6 2 3 3 2 2 2.40.48989

80.45714

3 4

Did not have strong foreign awareness outside Southeast Asia

0.095238 3 3 4 3 3 3.2

0.304762 2

Total 13.09523

8

EFAS TABLE

Factor Weigth Rating Average Stdev CV Value

1 2 3 4 5

Strenght

Has widespread distribution channel in Indonesia

0.190476 5 4 4 3 5 4.2

0.748331 0.8 4

Has several foreign operation in Southeast Asia0.14285

7 4 3 3 2 4 3.20.74833

10.45714

3 3

Strong financial product0.09523

8 3 4 3 4 3 3.4 0.32381 2

Has extensive brand products to cover wide segment

0.142857 4 4 4 4 4 4 0

0.571429 3

Weakness

Many her customer is lower middle income 0.142857 3 3 4 3 4 3.4

0.489898

0.485714 3

Raw material dependency 0.190476 2 3 3 2 2 2.4

0.489898

0.457143 4

Did not have strong foreign awareness outside Southeast Asia 0.09523

8 3 3 4 3 3 3.20.30476

2 2

Total 13.09523

8

GE Matrix

Weight Rating ValueOverall Market Size 0.22 5 1.10Competitive intensity 0.165 3 0.50Distribution channel 0.13 3 0.39Pricing package 0.101 2 0.20Product innovation 0.162 3 0.49Inflationary vulnerability 0.074 3 0.22Crisis impact 0.148 4 0.59

Total 1 3.49

Element

Market Attractiveness

GE Matrix

Weight Rating ValueMarket share 0.169 5 0.85Share growth 0.076 3 0.23Product quality 0.318 4 1.27Brand reputation 0.114 5 0.57Performance effi ciency 0.138 3 0.41Distribution network 0.061 3 0.18Performance productivity 0.123 3 0.37

Total 1 3.88

Element

Competitive Position

GE Matrix

GE Solution

Invest heavily in most attractive segment

Build up ability to counter competition

Emphasize profitability by raising productivity

QSPMOpportunities AS TAS AS TAS

O1 the fourth populous country in the world 0.123 0 0 0 0.00

O2 Foreign market 0.121 0 0 0 0.00

O3 reaching high income target market 0.094 4 0.38 3 0.28

O4 decreasing number of local competitor 0.086 4 0.34 3 0.26

O5 high entry barrier due to geographical condition 0.074 4 0.30 3 0.22

Threat

T1 Economic crisis leads to increasing cost 0.125 3 0.38 4 0.50

T2 High raw material cost 0.105 3 0.31 4 0.42

T3 Increasing number of unemployement 0.081 0 0.00 0 0.00

T4 The retailer prefer to not hold many inventories 0.075 4 0.30 3 0.23

T5 Compete with foreign brand 0.115 3 0.35 5 0.58

1.0 0.00 0.00

Strength

S1 Has widespread distribution channel in Indonesia 0.190 4 0.76 2 0.38

S2 Has several foreign operation in Southeast Asia 0.143 0 0.00 0 0.00

S3 Strong financial position 0.095 3 0.29 4 0.38

S4 Has extensive brand products to cover wide segment 0.143 3 0.43 5 0.71

Weakness

W1 Many her customer is lower middle income 0.143 2 0.29 5 0.71

W2 Raw material dependency 0.190 3 0.57 4 0.76

W3Did not have strong foreign awareness outside Southeast Asia 0.095 0 0.00 0 0.00

1 4.69 5.44

Strategy: Concentration of Growth by entering foreign and domestic market

IMPLEMENTATION

Domestic

Door to door marketing

Direct selling

Reaching wide segment

International

Partnership with local brand

Distribution channel via agent