Marketing Case

COUNTRY OF ORIGIN

The country of origin is Indonesia. The Dutch began to colonize Indonesia in the early 17th century; Japan occupied the islands from 1942 to 1945. Indonesia declared its independence after Japan's surrender, but it required four years of intermittent negotiations, recurring hostilities, and UN mediation before the Netherlands agreed to transfer sovereignty in 1949. After decades of repressive rule, free and fair legislative elections took place in 1999. Indonesia is now the world's third most populous democracy, the world's largest archipelagic state, and home to the world's largest Muslim population.

Its geographical location is South-eastern Asia, archipelago between the Indian Ocean and the Pacific Ocean and the major trading block is ASEAN. Indonesia, a vast polyglot nation, grew an estimated 6.1% and 6.4% in 2010 and 2011, respectively. The government made economic advances under the first administration of President YUDHOYONO (2004-09), introducing significant reforms in the financial sector, including tax and customs reforms, the use of Treasury bills, and capital market development and supervision. During the global financial crisis, Indonesia outperformed its regional neighbours and joined China and India as the only G20 members posting growth in 2009. The government has promoted fiscally conservative policies, resulting in a debt-to-GDP ratio of less than 25%, a small current account surplus, a fiscal deficit below 2%, and historically low rates of inflation.

COMPARATIVE ADVANTAGE OF INDONESIA

Indonesia is wealthy enough in natural resources like oil and gas and minerals. The exports are oil and gas, electronic products, plywood, textile and rubber. Specifically the electronic industry Indonesia has shown massive growth in the last 25 year at all levels therefore, the comparative advantage of Indonesia is electronic industry.

REASONS FOR COMPARATIVE ADVANTAGE

Porters diamond model

The Diamond model of Michael Porter for the Competitive Advantage of Nations offers a model that can help understand the competitive position of a nation in global competition. This model can also be used to determine the potential of any industry to become the comparative advantage

It has four determinants

* Factor conditions

* Demand conditions

* Related and supported industries

* Firm's strategy, structure and rivalry.

FACTORS CONDITIONS

Indonesia is considered as the developed country in the south East Asian region and it is progressing day by day. It has faced some challenges in the global economic downturn of 2008 but they recovered it prudently. It is considered on the 16th rank in terms of the GDP purchasing power parity and 38th in terms of GDP growth rate 6.5%. Indonesia has well established infrastructure (communication network, roads, transportation, media and etc). Finances are available on low interest rate 5.7%, banking network has extended over the whole country. Indonesia has 120 commercial banks (October 2011), of which 10 are majority foreign-owned and 28 are foreign joint venture banks. Indonesia has well-developed educational institutes which produces professional, high skilled and technique labour. The total labour force is 117.4 million that are easily trainable. Regarding to electronic industry the international brands like Samsung, L.G, Sony, Toshiba and etc are well established throughout the country with distribution networks via both modern and traditional retail networks. The strong economic fundamentals are reflected in the growth of its electronics industry, which is characterised by a well-developed consumer electronics sector and an emerging electronic components sector.

DEMAND CONDITIONS

In 2011, the Indonesian economy demonstrated considerable resilience in the face of mounting uncertainties in the global economy, reflected in even stronger growth performance and steady, sensibly managed macroeconomic stability that reflects the high per capita income $4,700/-. The escalating demand for the high end consumer products is evident that consumers have high purchasing power and in the global world people try to enhance their life styles therefore, people want to update themselves with new innovation and they have good knowledge about technology the in order to experience. Indonesia's consumer electronics devices market, defined as the addressable market for computing devices, mobile handsets and video, audio and gaming products, is projected at about US$10.7bn in 2012. This is expected to increase to US$17.8bn by 2016 with 14% growth rate, given by growth affordability of the key products and an expanding numbers of electronic retail outlets.

RELATED AND SUPPORTED INDUSTRY

According to the Ministry of Industry, Indonesia has a total of 250 electronics and component producers operating in the country. Indonesia has good competitive electronic environment where all the leading electronic entities has established the assembly lines. In order to assist them Indonesia has organized domestic or international ICs and semiconductor companies. Indonesia has structured electronic supplier network includes the companies like Reynolds electronics. In the context of supporting industries the financial institutes are there, educational institutes that educate the people about the technology, the distribution, marketing agencies and transportation system