CHAPTER I Introduction

I. Background It cant be denied that almost of our lifes daily equipment are wrapped in practical packaging by some brands named on top of it. Modernity manufactures and distributes what we need in day-to-day basis, providing basic needs of more than six billions people in the world. Products that are replaceable quickly and available to consume are included in fast-moving consumer goods (FMCG). In Indonesia, the growth of FMCG industry has moved rapidly. With at least stable growth of population, this industry has promising future here in Indonesia. This is even better with fact that theres growing number of people moving to higher class of income. Its predicted that investment in the industry will stay a favorite in 2014.

II.

Problem As Indonesia has bright investment opportunity from either outside and inside country, FMCG industrys competitiveness becomes tougher. Indonesia will be more open to external exposure. The main concern is to assess the likelihood of national firms to remain strong and arise stronger in the business with challenges and opportunities on hand.

III.

Methodology We conducted literature research on doing the papers.

IV.

Paper Structure Wed like to elaborate the SWOT analysis of two firms, Unilever as multinational company and Indofood as local representative along with comparisons of both. In the end, wed like to give suggestions for government and local firms based on our analysis.

CHAPTER II Reference and Theory

I.

The Nature of Fast-moving Consumer Goods Industry Fast Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG) are products that are sold quickly and at relatively low cost. Examples include nondurable goods such as soft drinks, toiletries, and grocery items. Though the absolute profit made on FMCG products is relatively small, they generally sell in large quantities, so the cumulative profit on such products can be substantial. ITC Limited, Procter & Gamble and Unilever are the three biggest consumer goods company that operates across the globe. The term FMCGs refers to those retail goods that are generally replaced or fully used up over a short period of days, weeks, or months, and within one year. This contrasts with durable goods or major appliances such as kitchen appliances, which are generally replaced over a period of several years. FMCG have a short shelf life, either as a result of high consumer demand or because the product deteriorates rapidly. Some FMCGs such as meat, fruits and vegetables, dairy products and baked goods are highly perishable. Other goods such as alcohol, toiletries, pre-packaged foods, soft drinks and cleaning products have high turnover rates. The following are the main characteristics of FMCGs : From the consumers' perspective: frequent purchase, low involvement (little or no effort to choose the item products with strong brand loyalty are exceptions to this rule), low price. From the marketers' angle: high volume, low contribution margins, extensive distribution networks, high stock turnover.

II.

Indonesias Current Condition for Fast-moving Consumer Goods Industry Retail sales in Indonesia are forecast to grow at 4,6% in 2012, with growth averaging 4,8% in the following three years. In 20111-2015, the emphasis will

remain on the sale of relatively low-cost staple goods, but sharp inequalities in income distribution mean that there is also a market for higher-cost, luxury items. Urban areas, which accommodate an estimated 48% of the population will remain the focus of retail activity. Shopping centers and malls are proliferating in the capital, Jakarta. Indonesias major retailers are implementing aggressive growth plans. Minimarkets in particular are expanding rapidly, led by a local company, Indomarco Prismatama, which has expanded under the brand indomaret, and has almost 5000 stores. Its main competitor, PT Sumber Alfaria Trijaya, which operates the Alfamart chain of minimarts, has a similar numbers of stores and plans to open 1000 new outlets during 2011. Competition in the retail sector is fierce, both within and across formats. Several multinationals, such as Carrefour, Matahari, and etc plans to expand their business too. Several government regulations could constrain the growth of modern retailers. The government is concerned about the decline of traditional retailers. There are some key issues related FMCG products in Indonesia, they are: 1. Food : food labelling obligation by BPOM 2. Draft of Halal Law 3. Alcohol, and 4. Cosmetics

III.

Globalization of Fast-moving Consumer Goods Globalization is characterized by a multiplicity of links and interrelations of countries and societies constituting contemporary world system. Globalization process have a significant influence on consumption. Three main areas where it is evident may be identified. The first area in which global consumption forms is trading infrastructure and services including increasing number of super and hypermarkets and associated dissemination of self-service form of services.

The second sphere where global process influence consumption are purchasing and consumer behaviors of individual consumer segments, including the assortment and brands of selected commodities and consumer services. The last sphere of consumption globalization is the structure and hierarchy of purchasers needs, their system of values, attitudes and lifestyle. An efficient brand strategy on global market is important, particularly for fast moving consumer goods (FMCG) or durable goods. Global brands undoubtedly have numerous advantages, are recognizable by consumers all over the world, are associated with high quality, reliability in their use, prestige and many other positive attributes ascribed to them by purchaser.

CHAPTER III Case Study: Unilever and Garuda Foods Comparison

I. Development of Unilever in Indonesia Unilever Indonesia is one of multinational company that have started their business in Indonesia on December 5th 1933 as Zeepfabrieken N.V.Lever. This company does their business operation on consumer goods sector. In Indonesia, Unilever produce many kinds of soap, shampoo, detergent, margarine, oil, food, and beverages. And then, on July 22nd 1980 Zeepfabrieken N.V.Lever renamed as Unilever Indonesia and listed 15% of their stock in Jakarta and Surabaya Stock Exchange. On June 1997, the company renamed Unilever Indonesia become PT Unilever Indonesia Tbk. During their successful on fulfill consumer goods needed in Indonesia, there are so many product have produced by PT Unilever Indonesia Tbk. Such as, Surf, Rinso, Buavita, Sunsilk, Taro, Pepsodent, Molto, Lifebuoy, Clear, Close Up, Citra, Axe, Royco, Kecap Bango, Sari Wangi, Blue Band, Wall's, Sunlight, Pond's, Lux, Rexona. Unilever is a multinational company; it means that Unilever has different character of market in every country. It makes Unilever should getting the picture how the customer needs in each country because they cant offer the same type of product in different market. As we know, Unilever has so many product mix. It shows that Unilever always try to fulfill their various consumer needs on daily needed product. Unilever always uses market research before they start to create and launch one product. By an appropriate market research, usually a company will has a capability to fulfill what is a market want that they had aim. Thats why, Unilever always go through in every market of different country. As a successful multinational company, Unilever does the proper research and careful in analyzing the environment, consumers and competitors in Indonesia. Challenges as multinational company is diverse environment, customers and competitors that vary in each market are different. Unilever is not the only one company that run the business customer goods sector in Indonesia. So many rivals Unilever has in Indonesia both locally and globally. In

the food and beverage products are such as Orang tua, GarudaFood, WingsFood, etc. Wings in cleaning products and Kao. In body care products and toiletries there are P & G, Wings, Orang Tua and Mandom. Unilever and its competitor have an almost equal capabilities as a global company and both are customer goods manufacturer that is produced. But, as the market leader, Unilever market defense strategy with good management relationship with the customer, through product innovation that is needed customers. It makes Unilever still better compared to their competitors. II. Development of Garuda Foods Tudung Group is the company that owns 3 Line of Business (LOB), namely lob Food and Beverage (GarudaFood Group) that focuses on the manufacturing of snacks and drinks, Distribution (PT Sinar Niaga Sejahtera) GarudaFood lob that distributes products to market penetration throughout the Indonesia, and the Agribusiness (PT Garuda Bumi Perkasa) with business CPO (Crude Palm Oil) and PT BMT (Earth Blossom Farm). GarudaFood originally named PT Tudung established in 1958 in Pati, a small town in Central Java province, Indonesia. Initiated by the late Mr. and Mrs. Darmo Putro which is the forerunner of GarudaFood Group. Then in 1979, under the banner of PT Tudung Putra Jaya, began producing crisp nut (roasted peanut) without brand and begin using the brand name "Garuda" in 1987. Since then the business is growing so nuts Garuda managed to get the biggest share in the market peanut skin. In 1990 founded PT Garuda Putra Putri Jaya, and add product variants to produce nuts coated (coated peanut) are nuts and nut eggs atom. GarudaFood manufacturing network spread across various regions in Indonesia with a total of 11 plants, 8 factories in Java, 2 mills in Sumatra, and 1 plant in Sulawesi. It has nearly 15,000 employees and a production capacity of 550 thousand tons per year. Products produced GarudaFood distributed by PT Sinar Niaga Sejahtera (SNS) which is the holding company of the Distribution Division hood Putra Putri Jaya. Founded in 1994, the role of the SNS is crucial for the development of GarudaFood. Thanks to her role, a wide range of products can be obtained GarudaFood consumers in remote areas throughout Indonesia. SNS also partnered with a large sub distributor spread from Aceh to Papua to further expand the network.

The power of the network in the form of 201 depots, 740 fleet, 1000 over 2080 sales agents and provided a key to GarudaFood to distribute products throughout Indonesia. Not only domestic distribution, GarudaFood also trying to win the competition in the international market. International Business Division is an integral part of GarudaFood continually expands in the global market with the International GarudaFood front guard. As a result, some products such as "Peanut Garuda", "Gery Biscuits" and "Okky Jelly" has penetrated the international market. In addition, today has established PT Xiamen-GarudaFood Ltd which focuses on marketing in China. Garudafood has a mission of change that create value for society based on mutual individuals develop through superior, virtuous and competent company with a vision to be the two best food and drink in Indonesia in 2015. Garudafood has five upheld the philosophy of human values, business ethics, unity through harmony, fast and excels in innovation and work intelligently in the culture of learning. The values of the company is the handle to run and develop the future GarudaFood

III.

SWOT Analysis Unilever Strengths: 1. PT Unilever product promotion strategies that effectively display the typical models young, white, long-haired, spurring consumers (specifically women) to purchase the product in order to experience the results received the model in the advertisement.

1. PT Unilever heavily on social mission, so proximity to consumers can be maintained. This is evident from the advertising and promotion spending that has driven sales growth in the competitive market. PT Unilever Indonesia as one of the companies with the largest advertising expenditure by Marketing Magazine (Top Brand Survey, Special Edition 2007) 2. Consumer goods market leader in Indonesia. 3. Having a team of people dedicated, skilled, and motivated at all ranks. 4. An increase in market share for the important categories such as face care, savory, and ice cream.

5. PT Unilever already has its own distribution network so that the distribution of products to the underserved areas can. Weaknesses: 1. PT Unilever has a matrix structure, that there are several challenges that must be faced by the company is the first, the difficulty of coordinating activities between departments that have an agenda and schedule of their own. Second, communication to employees can receive different messages. And third, the resolution of the conflict between the initiatives of the support departments (HR, finance, etc.) with the department of product lines which are usually very businesslike. 2. Lack of market response to certain products. 3. Bureaucracy long as the policy of centralization that led Unilever Indonesia cannot just decide something. 4. Ambiguity halal certificate for a specific product. 5. The majority of products Unilever has a low entry barrier. Opportunities: 1. Economic stability with relatively good economic growth over the Indonesia. 2. Strong economic growth in the region such as the islands of Sumatra, Kalimantan, Sulawesi and Papua. 3. The high customer satisfaction evident from the title of prime index of consumer satisfaction. 4. A large national market players who have not had a way good cosmetic production. Threats: 1. An increase in the cost of raw materials and packaging materials such as palm oil, coconut sugar, and petroleum-based materials due to rising oil prices and other commodity chemicals. 2. Rupiah exchange rate against foreign currenciesis not always stable. 3. The rise of counterfeiting and smuggling of products from china. 4. The elimination of fuel subsidies for the industry. 5. Competitive products at a lower price.

GarudaFood

Strengths: 1. Garudafood product sold at a low enough 2. Products Garudafood distributed far and wide 3. Using the artist that is well known for advertisement Weaknesses: 1. Low prices lead to low product quality imagery 2. Packaging products considered less safe, because the packaging that use cup for beverages can be easily damaged and leaking 3. Some products disappear from market and advertising Opportunities: 1. Economic stability with relatively good economic growth over the Indonesia. 2. Low price makes GarudaFood more desirable in society 3. Some people consider the cup packaging for beverages is one of GarudaFoods superiority because it makes the product light in weight and more easily to bring anywhere Threats: 1. Low cost products sometimes make the producer have to aside the quality 2. The elimination of fuel subsidies for the industry. 3. Competitive products at a lower price.

CHAPTER IV Prospect and Challenges

Prospect in Indonesias Fast Moving Consumer Goods Industry Prospect section will be divided into two, global influence and within Indonesia itself. General prospect from outside Indonesia; 1) Stagnating US economy and 2) Eurozone crisis deepen which will affects emerging markets (Asia, which Indonesia is one of them) growth rate, while general prospect from Indonesia is 1) the growing popularity of e-commerce (growing size of smartphone or internet users) which will help advertising and transaction costs. 2) it is expected that million households in emerging markets (Indonesia included) will grow rapidly which in turn will increase demand for such products in industry due to growing income between 2010-2015. Prospect for new player also lies mainly at the increasing demand of such products in industry. Challenge in Indonesias Fast Moving Consumer Goods Industry Businesses operating in fast moving consumer goods industry are faced with many challenges: companies strive to reduce production and supply chain costs, achieve world class delivery performance, satisfy an avalanche of customer demands and changing requirements just to remain competitive, companies need to become profitably sustainable, meeting the changing demands of consumers and the increasing pressures on profit margins, consumers are harder to target, reach and satisfy, and loyalty is decreasing.

I.

II.