The Condition of Instant Noodles Industry in Indonesia

The Condition of Instant Noodles Industry in Indonesia

[PT Indofood Sukses Makmur Tbk]

 Presented to

Sukasah Syahdan

Instructor of Advanced Business Communication

Prasetiya Mulya Business School

[pic 1] 

   Prepared by

Nathanael Pavita 0151163013

Septian Budhy Dharmawan 0151163012

Lucas Herman Cendekiawan 0151163026

Metta Tjungandi 0151163032

15 March, 2017

Executive Summary

Purpose and method of this report

This analysis was created to understand the condition of the instant noodle industry in Indonesia and the economic condition of the instant noodles player, especially PT Indofood Sukses Makmur Tbk. The purpose of this report are to:

• analyse the opportunity and threats of the competitor in the market
• recommend strategy to maintain the Indomie position in the market

We conducted analysis by using Swot matrix and Porter Five Forces Model which were based on information from trusted source such as Euromonitor. The analysis was limited on packaged instant noodles, local & Korean instant noodles in Indonesia, Indonesian lifestyle about health and taste, and Indomie products only.

Findings and conclusion

The result of the analysis conducted are:

1. there are weaknesses regarding the unhealthy image of instant noodle and lots of rivalry threats
2. buyer power is considered moderate while the supplier power is low
3. threat of substitution is considered moderate because of the variety of substitution product in the market

The result of this analysis show that Indomie need to develop strategy to cover the weakness while also fight the upcoming threats.

Recommendation for covering the weakness and fighting upcoming threats

Recommendation for covering the weakness and threats are:

1. create more healthy oriented campaign to capture market segments that concern with healthy lifestyle
2. develop a new product with lower calories using healthier type of flour and substitute of additives.
3. offer new value proposition of healthy product to change the unhealthy perception of instant noodles.

Table of Contents

1        Introduction…………...…………………………………………………….…        1

1.1        Purpose of this study.....………………………………………………...….....        2

1.2        Scope of this study...…………………………………………..…………..…..        2

1.3        Sources and methods...…………………………………………………..…..        2

2        Findings and discussion……………………....……………………...……        5

2.1        SWOT Matrix Analysis.....……………………………………………...….....        2

2.1.1        Strength………………………………………………………………………....        5

2.1.2        Weakness……………………………………………….……………………....        5

2.1.3        Opportunity…………………………………………………………………......        5

2.1.4        Threats……………………………………………………………………..…....        5

2.2        Porter’s Five Forces Analysis.………………………………………..……….        2

2.2.1        Competitor Rivalry……………………………………………………………....        5

2.2.2        Supplier Power ………………………………………………………………....        5

2.2.3        Buyer Power…………………………………………………………………....        5

2.2.4        Threats of Substitution………………………………………………………....        5

2.2.5        Threats of New Entry………………………………………………………....        5

3        Conclusions……………………………………....……………………...……        5

4        Recommendations……………………………………………………...……        5

References………………………………………………………………………...….        10

Appendix……………………………………………………………………………..…        11

1                Introduction

Based on euromonitor, current Indonesia economic condition impact the retail value growth and the production cost for the player in that industry must use. With the raise price over fuel in 2016, impact to increase in production cost and diminishing power of consumer purchase. With this impact, the average unit price of rice, pasta, and noodles is increased while the retail value growth slows down.

        The main topic of this project is the noodles industry, in general, noodles can be consumed by different kind of income level across the country. With the majority of population in Indonesia belonging to low-income demographics, this make people more price sensitive over products. Majority of instant noodles are distribute in traditional retailers, but in modern retailers players need to be more aggressive in terms of continuous promotional efforts. (See Table 1.1)

1.1                 Purpose of this study