CASE STUDY

New Business Assessment

GEMPAR GUMYADI
LEADERSHIP ACCELERATION & DEVELOPMENT PROGRAM

COMPANY BACKGROUND

VISION
strengthen and incubate sustainable businesses
that
empower
employees
and
benefit
stakeholders and society.
GSK STRATEGY STATEMENT
Achieve 3x GDP growth by 2020
Actively manage portofolio
Incubate agilely and invest selectively in Indonesia multi-growth sector
Intensify focus on high growth Asian markets
Secure strategic partner by leveraging Group reputation
Create empowered and customer centric workplace of choice
PROPERTY
OTHER
INVESTMENT

Established in 1953 by Dasuki Angkosubroto, Gunung Sewu

Group (GSG) initially focused on trading and distributing staple
commodities
In the 1960s, became one of Indonesia's largest agricultural
commodity traders

INSURANCE

AGRI

GSG is now one of the largest investment and management

groups of companies in Indonesia with over 25,000 workers

INDUSTRY ANALYSIS

LOW
SUPPLIERS

Bargaining power of suppliers

HIGH
POTENTIAL
ENTRANTS

LOW

Threats of
new
entrants

MILKING COWS
7-ELEVEN
4500
ABC
3000
TOP FOODS
N/A

HIGH

INDUSTRY
COMPETITORS

SUBSTITUTES
Rivalry among
existing firms

Threats of
substitute

Bargaining power of buyers

Economies of scale ()
Product differentiation ()
Capital requirements ()
Switching costs (X)
Access to distribution channels ()
Cost disadvantages independent of scale ()
Government policy ()
Expected retaliation()

BUYERS

HIGH

high
suppliers
subtitutes
buyers
potential entrance
industry competitors

moderate

low

UNATTRACTIVE

BUSINESS MODEL

Key Partners

Key Activities

DGLAHS
GKSI
AI CENTER
IPS
CDTC
DISTRIBUTOR
CATTLE EXPORTERS
MILK EXPORTERS
FEED & CONCENTRATE SUPPLIERS

R&D
TRAINING
PROCESING
DISTRIBUTION

Value Propositions

Customer Relationships Customer Segments

EDUCATION
SEHAT ITU ENAK:
EASY
FAMILIES OF EMPLOYEE
FRESH MILK PASTERIZED
CHEAPER
DAIRY PRODUCT CONSUMER
UHT & STERILIZED
FARM TRIP
CHEAPER THAN ANOTHER

Key Resources

Channels

CATTLE FEED
FRESH FRUIT

OUTLET
DISTRIBUTOR
EMPLOYEE

Cost Structure

Revenue Streams

R&D
TRAINING
PROCESING
DISTRIBUTION

BULK SALES
RETAIL PRICE

STRATEGY PLAN
Dairy Sales by Major Segments

west java
central java
east java
lampung
south borneo
west borneo
east borneo
source: IFC

dairy cattle population

2008
2009
2010
111250
117337 124797
118424 120677
123091
212322
221743 232001
263
221
229
124
96
81
173
84
86
0
6
8

Source: Komite Tetap Industri Pengolahan makanan dan minuman

Domestic Milk Concumption by Product Type

Mio liters

F,N,I

U,I

G,D

F,N,D,F

west java
central java
east java
lampung
west borneo
south borneo
source: IFC

fresh milk production (tones)

2008
2009
2010
225212 255348 270616
89748
91762 106040
312270 461880
531797
352
178
185
0
0
0
186
129
123

Several issues impact on dairy industry development in Indonesia:

- Scarcity of forage and high price of dairy cattle feed and concentrate
- Small farm size and scarcity of land at suitable elevation for dairy cattle farming
- Low dairy cow productivity with an avarage of about 10 litres of milk per cow per day
- Low farm profitability due partly to low milk yields
- Low milk quality with only 12 percent of milk production meeting the minimum standard
- Poor farm and herd management practices
- Lack of tehnology for milking and processing of fresh milk
- Limited acces to high-quality genetics
- Limited acces to finance and bank loans
VALUE CHAIN ANALYSIS
- Limited farmer education
Source: IFC

COMMON CYCLUS OF MILK IN INDONESIA

Local Farmer

price (Rp /Lt)

mean (Rp /Lt)
diff (Rp /Lt)

KUD

Processor

farmer-KUD
2700
3500
3100

Distributor

KUD-Processor
3400
3900
3650

Consumer

consumer
UHT
fresh milk
14000
16500

550

Source of market price:

IFC
http://www.ngupasan-jaya.com/id/page/daftar_harga_susu_cair/

Linking producers more closely with custumers

GGL

Consumer

differrentiation
strategy

Focus
Cost leadership
- decrease the consumer price Rp 550 or increase volume of product 4%

MARKETING PLAN
-

Product
Price
Distribution
Promotion

UHT
200 ml
1 lt
GGL
susu bendera susu ultra milo
GGL
susu bendera susu ultra milo
2700
3300
3400
3600
13500 N/A
14000 N/A
fresh milk (pasterized)
https://www.productfocus
1 lt
.com/wpGGL
greenfield diamond
content/uploads/2011/04/F
ree-Image.jpg
15950
19950
16500
Source of market price: http://www.ngupasanjaya.com/id/page/daftar_harga_susu_cair/

http://2.bp.blogspot.com/uJGNPCVZbEY/VTe8zg7Gy7I/AAAAAAAAFCg/n_
j9Q-dBCy8/s1600/20141002_083429%2B%2BCopy.jpg ,
https://blogs.glowscotland.org.uk/wl/Stoneybu
rnPS/files/2012/06/Fun-with-Directions-512icon.png

http://www.nyunyu.com/medias/201
2/10/IMG_0723.jpg

http://www.iswarin.com/wpcontent/uploads/2012/09/mini-market-11.jpg

FINANCIAL ANALYSIS
Invesment
stable
dairy cattle
dairy cattle tool
another equipment
total
Operational
feed
concentrate
operator
total/day
IB & health
total/year

year
0
1
2
3
4
5
NPV
NPV
IRR

quantity
200

price
250,000,000
8,000,000
66,666,667
33,333,333

total
250,000,000
1,600,000,000
66,666,667
33,333,333
1,950,000,000

quantity
1,600
300
35

price
250
2,600
50,000

200

45,000

total
400,000
780,000
1,750,000
2,930,000
9,000,000
1,078,450,000

cash flow
-10,401,450,000
-4,610,950,000
1,469,075,000
7,853,101,250
14,556,328,813
21,594,717,753
24,148,133,217
-10,401,450,000
13,746,683,217
33%

Revenue
5,790,500,000
6,080,025,000
6,384,026,250
6,703,227,563
7,038,388,941

interest
12%

Executive Summary

we can assume that this business is unattractive just by industry

analysis.
But if we look at the core competence we have, we have a good
opportunity to enter this business. Scarcity of forage and high price
of dairy cattle feed and concentrate is one of the biggest thing which
impact on dairy industry development in Indonesia and we can deal
with it.
Based on quality, liquid milk is more attractive than another.
If we make the supply market chain more close between producers
and customer, we can compete with cpmpetitor by cost leadership
strategy with added value the quality of our product.
Based on the analysis above and IRR is about to 33%, I bet that this
busines is proper.