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CHANT INK

I.

Companys Profile
CHANT INK is an Indonesian Fashion Company founded by Agustina Dias in 2011,

known for its unique fashion clothing for men, women, teenagers and children. CHANT INK
sales a unique yet fashionable outfit that made of batik as the basic material. Batik is famous as
one of Indonesian identity with unique different patterns. CHANT INK has grown into a major
multinational clothing company.
Agustina Dias along with the designer team creates unique yet fashionable design that
different from any other clothing company. Agustina Dias as the founder wants to introduce
Indonesian culture to the world through a fashion product called CHANT INK. The name of
CHANT INK is inspired from the pen-like tool called canting that used to apply hot wax in the
process of batik making.
CHANT INK exists in 10 countries in Asia and Europe with over 50 stores and 2
factories and as of 2015 employed around 5,000 people. CHANT INK headquartered in Jakarta,
Indonesia.

II.

Organizational Design
CHANT INK was a domestically oriented with international sales trying to be a

multinational corporation by adopting a global organization design as a firm moves. Rather than
use Global Product Design or Global Area Design, CHANT INK combines those both strategies
into a Hybrid Global Design. CHANT INK decided to use Hybrid Global Design as its
organizational structure because CHANT INK wants to adopt an organizational structure that fits
with CHANT INK condition.

CHANTIK divided its area into 2 that are Asia Pacific Division and Europe Division and
using worldwide product design. Worldwide product divisional structure was made by
combining Global Product Design and Global Area Design. CHANT INK chose worldwide
product divisional structure because:
1. CHANT INK is reasonably diversified
2. CHANT INK Original domestic firm structure based on product division
3. Value creation activities of each product division coordinated by that division worldwide
a. Help realize location and experience curve economies
b. Facilitate transfer of core competencies

A worldwide product division structure

Headquarter

Adult Clothing

Teen Clothing

Asia Pacific
Division

Children Clothing

Europe Division

There are still problem faced by CHANT INK while using a worldwide product division
structure, they are:
1.
2.
3.
4.

Requires strong skills, particularly product heads


Organization becomes heterogeneous; not a unified culture
area managers have limited control
leading to lack of local responsiveness

To overcome the problem above, the management of CHANT INK provides the
following solution:
1. Focus on hiring, training, and best practice sharing
2. Develop and reinforce elements of common culture (if important)
3. Coordination in the Global Organization

III.

Marketing Strategy
International marketing strategy should support the firms overall business strategy.

CHANT INK strategy is differentiation, whereby CHANT INK attempts to establish and
maintain the image that the products are fundamentally unique from other products in the same
market segment.
CHANT INK products approach is in the middle of standardization and customization,
which allows CHANT INK to avoid of failing sales of foreign customers because the products
not desirable. Follow the policy of think locally, act globally.
a. Market Segmentation
The market segmentation of CHANT INK is all fashion enthusiasts in the world that
interested in traditional clothing. CHANT INK recruits the designers from different countries in
the hope to fulfill demographic intentions to segment consumers with various tastes.
b. Target Market
CHANT INK is mostly attempting to target young teenagers, which are looking for
unique yet stylish clothing with a cheap price because many of them do not earn their own
income. CHANT INK tries to implement a certain fashion direction by attempting to catch older
consumers that are willing to become young morally just by wearing CHANT INK clothing.
Moreover, CHANT INK tries to target children that love unique pattern and colorful shirts.
c. Product
CHANT INK provides many different fashion concepts for men, women, and children in
wide range of color. The main product strategy is to that CHANT INK only produce
unique product that different from any other company clothing. Beside CHANT INK is only

producing 200 pieces per design model so that would make CHANT INK is kind of limited
edition.
In order to win the market competition, Agustina Dias makes a special team called
Design team. Design team will responsible into making a new product that fits with company
philosophy. This Design team will make a product that is in the middle of standardized product
and customized product. It means the products will be the same in all the market place without
leaving the original domestic characteristics. CHANT INK products may be affected the laws
and regulations of host countries. For example, countries may impose labeling requirements,
health standards, technical standards, and so forth on consumer products. The products sold in
Asia could be different with one sold in Europe in term of labeling, packaging, etc.
d. Price
Because the concept of CHANT INK is to provide its products at a reasonable price to its
customers, it follows that customers find its prices affordable. Due to different cost of doing
business from country to country, as do transportation costs and differences in distribution
systems, pricing can be affected by fluctuating exchange rates. CHANT INK uses a market
pricing policy (prices are customized on a market-by-market basis) is usually used by firms
following a geocentric approach to marketing.
e. Promotion & Distribution (Place)
The promotion purpose is to give a message to customer about CHANT INK

concept. CHANT INK promotes its identity and uniqueness of fashion in affordable
price. The media used to advertise CHANT INK products is mass media such as magazine,

television, and Internet. CHANT INK also actively joins Fashion event hold by host country to
help promote its products.
CHANT INK creates a global advertising. CHANT INK sells quality and the
communication reflects of it: Style, traditional, uniqueness, and Indonesian dandy spirit. CHANT
INKs message is to give people the feeling that they have acquired unique and quality product
owing to its price and manufacturing

The ads for CHANT INK by Agustina Dias, represent a small movie with a storyline.
The spectator can identify herself with it and says to herself that by wearing the outfit she will
feel a certain sense of confidence, and modesty.
CHANT INK hires local sales representatives for foreign markets. Sales representatives
can be reasonably certain that cultural gaffes will be reduced. Personal selling promotes close
personal contact with customers. CHANT INK finds it easier to acquire market information
from sales representatives than from other sources.
Sales promotion offered by CHANT INK is 5% discount for Indonesia buyers who buy
CHANT INK products in foreign stores. CHANT INK also offers 5% discount for the customer
who makes transaction on her/ his birthday.
IV.

Operational Strategy
CHANT INKs overarching strategy is achieving growth through diversification with and

vertical integrations. It adapts couture designs, manufactures, distributes, and retails clothes
within a month of the original design first appearing on catwalks.

a. Just in time production


CHANT INK delivers fashionable and trendy numbers catered for different tastes
through a controlled and integrated process just in time. CHANT INK keeps a significant
amount of its production in-house and makes sure that its own factories reserve 85 percent of
their capacity for in-season adjustments. In-house production allows the organization to be
flexible in the amount, frequency, and variety of new products to be launched. The company
often relies heavily on sophisticated fabric sourcing, cutting, and sewing facilities nearer to its
design headquarters in Jakarta.
If a certain style or design suddenly becomes the rage, CHANT INK reacts quickly,
designs new styles, and gets them into stores while the trend is still peaking . CHANT INK also
has extra capacity on hand to respond to demand as it develops and changes. For example, it
operates typically 4.5 days per week around the clock on full capacity, leaving some flexibility for
extra shifts and temporary labor to be added when needed.

This then translates to frequent shipments and higher numbers of customer visits to the
stores, creating an environment of shortage and opportunity. This strategy allows CHANT INK
to sell more items at full price because of the sense of scarcity and exclusiveness the company
exudes. CHANT INKs total cost is minimized because merchandise that is marked down is
reduced dramatically as compared to competitors.

b. Inventory management
Inventory optimization models are put in place to help the company to determine the
quantity that should be delivered to every single one of its retail stores via shipments that go out
twice every month. The stock delivered is strictly limited, ensuring that each store only receives
just want they need. This goes towards the brand image of being exclusive while avoiding the
piled up of unpopular stock.
This quick in-season turnaround, from production facilities located close to CHANT
INKs distribution headquarters in Jakarta, allows CHANT INK to ship more often and in
smaller batches. If the design CHANT INK hastily creates in an attempt to chase the latest trend
does not in fact sell well, little harm is done.
The batch is small, so theres not a ton of unsold inventory to get rid of. And because the
failed experiment is over in a jiffy, theres still time to try a different style, and then a different
one after that.
c. Centralized logistics
CHANT INK sticks to a deep, predictable and fast rhythm, based around order fulfillment
to stores. Each CHANT INK outlet sends in two orders per month on specific days and timing.
Trucks leave at specific times and shipments arrive in stores at specific times. Garments are
already labeled and priced upon destination.
As a result of this clearly defined rhythm, every staff involved (from design to
procurement, production, distribution, and retail) knows the timeline and how their activities pan
out with respect to other functions. That certainly also extends to CHANT INK customers, who
know when to visit stores for fresh new garments.

d. Process Technology
CHANT INK's communication and coordination through high technology information
systems is one of CHANT INK's success factors relative to its competitors. CHANT INK
reconstructed its supply chain so that daily sales data are immediately shared with its stores, its
headquarters and its concentrated production network by providing the shops with the necessary
technology such as customized handheld computers and logistics capabilities to collaborate with
other partners in the company's supply chain. These computers process data on orders, sales
trends and consumer reactions to products in stores.
e. Capacity
CHANT INK employs a chase demand capacity management in its operations. Spare
manufacturing capacity is mirrored in the company's storage function, where up to 50 extra staff
can be drafted in during busty periods. As new stock delivery schedules are regimented,
customers know when new stock is due and traffic in stores is heavier at such times. As a result,
the company is able to adjust its resources to match the demands as appropriate. Procurement
and production planners make preliminary, but crucial, estimates of manufacturing costs and
available capacity.
A small change in retail orders, for example, can result in wide fluctuations in factory
orders after it's transmitted through wholesalers and distributors. CHANT INK avoids costly
overproduction and the subsequent sales and discounting prevalent in the industry.
f. Flexibility
Designers (of average age 26) draw the design sketches then discuss it with market
specials and planning & procurement staff illustrating a flexibility of ideas generation and on the
other hand the huge number of designs reflects the ability to meet almost all the fashion
requirements by customers of all ages (up to 55). This adaptive model rather than traditional
merchandising is very different from its competitors.

CHANT INK owned many of the fabric dying, processing and cutting equipment that
provided CHANT INK added control and flexibility to adopt new trends on demand. The added
flexibility helped CHANT INK on two fronts: shorter lead times and fewer inventories.
V.

Financial Strategy
International business transactions not only require the buyer and seller to reach

agreement on price, quantity, and delivery date, they also require buyers and sellers to negotiate
and agree on which currency to use for the transaction, when and how to check credit, which
form of payment to use, and how to arrange for financing.

Managing Working Capital


Working capital is held to facilitate day-to-day transactions and to cover the firm against

unexpected demands for cash. However, since the return on working capital is low, financial
managers generally try to minimize balances. CHANT INK manages its working capital by
minimizing currency conversion costs; and minimizing foreign-exchange risks.
1. Minimizing currency conversion
Because there is a lot of internal trade such purchasing material or selling products, etc,
CHANT INK experience a constant need to transfer funds among the subsidiaries bank
accounts.

Cumulative bank charges for these transactions can be high, and consequently,

CHANT INK use netting operations, where possible, to minimize the amount of funds that must
be converted.
Bilateral netting is done between two business units, and multilateral netting is done
among three or more business units. The text provides an example of a multilateral netting
operation.
2. Minimizing foreign-exchange risks
Firms may use a leads and lags strategy to try to increase their net holdings of currencies
that are expected to rise in value and decrease their net holdings of currencies that are expected
to fall in value.
Leads And Lags is the alteration of normal payment or receipts in a foreign exchange
transaction because of an expected in exchange rates. An expected increase in exchange rates is

likely to speed up payments, while an expected decrease in exchange rates will probably slow
them down.
Accelerating the transaction is known as "leads", while slowing it down is known as
"lags". Leads will result when firms or individuals making payments expect an increase in the
foreign-exchange rate, while lags arise when the exchange rate is expected to fall. Leads and lags
are used in an attempt to improve profits.
The speed of payments increases if the exchange rates increase, and decrease if the
exchange rates decrease. If investors expect the exchange rate to increase, they might rush
payments ("leads") in order to improve their position. If they expect rates to fall they might wait
on the payments ("lags").

International Capital Budgeting

The more common approaches to evaluate investment projects are net present value,
internal rate of return, and payback period.
CHANT INK evaluates the project/ investment with Net Present Value, Internal Rate
Return, Payback Period. Firms calculate the net present value of a project by estimating the cash
flows the project will generate in each time period, and discounting them back to present. When
evaluating international projects, firms must also consider risk adjustment, currency selection,
and choice of perspective for the calculations.
A project can also be evaluated using the internal rate of return. This method requires
that managers first estimate the cash flows generated by each project under consideration in each
time period, then the interest rate, or internal rate of return is calculated that makes the net
present value of the project just equal to zero.
A firm can also calculate a projects payback period, the number of years it will take to
recover, or pay back, the projects earnings from the original cash investment, when evaluating
projects.

This method is a simple one; however, it ignores the profits generated by the

investment in the longer run.

Sources of International Investment Capital

CHANT INK must secure sufficient capital to fund promising projects. Whether funds
come from internal sources or external ones, CHANT INK want to minimize the worldwide cost
of capital, foreign-exchange risk, political risk, and its global tax burden.
1. External Sources of Investment Capital
Various debt and equity alternatives exist for CHANT INK that want to raise external
capital. CHANT INK takes advantage of better rates on Eurocurrency-based loans, as well as
raising capital through the sale of Eurobonds. Funds may also be borrowed on a short- or longterm basis. Firms could also enter the swap market and exchange financial obligations with
another firm.
2. Internal Sources of Investment Capital
One source of investment capital is the revenue cash that CHANT INK generates
internally. A firm can use the cash flow generated by any subsidiary to fund the investment
projects of any other subsidiary, subject to legal constraints.

Strategic Use of Transfer Pricing


International businesses can reduce their overall tax burdens by using transfer pricing and

tax havens. Transfer pricing refers to the prices one branch or subsidiary of a parent charges a
second branch or subsidiary for goods or services. Transfer prices can be calculated using a
market-based approach, or a nonmarket method.
CHANT INK uses Market-Based Transfer Prices. The market-based method utilizes
prices determined in the open market to transfer goods between units of the same company. The
text illustrates this concept with an example of how Hyundai uses the approach. A primary
benefit of the market-based approach is that it reduces conflict between units over the
appropriate price.

Furthermore, the approach promotes the MNCs overall profitability by

encouraging the efficiency of the selling unit.

Tax Havens
CHANT INK also reduces their tax burdens by locating their activities in tax havens, countries

that impose little or no corporate income taxes. MNCs using tax havens divert income from subsidiaries
in high-tax countries to the subsidiary operating in the tax haven countries.

VI.

Human Resource Strategy


The international HRM process involves understanding the strategic context of HRM

within the firms overall strategy, recruiting and selecting appropriate managerial personnel,
providing necessary training and development, assessing performance, providing compensation,
and evaluating managerial retention and turnover.

International Managerial Staffing Needs


CHANT INK is in between Centralized and Decentralized control. CHANT INK uses

combination of both home and host country managers.


CHANT INK hires its managers from Parent country nationals (PCNs) and Host country
nationals (HCNs). Parent country nationals (PCNs) are residents of the international businesss
home country who are transferred to one of its foreign operations.

Communications and

coordination with corporate headquarters is typically facilitated when PCNs are employed
because they normally share a common cultural and educational background with headquarters
staff.
PCNs may, however, lack knowledge of local laws, culture, economic conditions, social
structure, and political processes. Moreover, they may be expensive to relocate and maintain in
the host country. In addition, because a host country may impose restrictions on the number of
employees that can be transferred, a company may not have the freedom to hire whom it wants.
Host country nationals (HCNs) are residents of the host country, and are the most
common choice for mid-level and lower-level jobs. Employing HCNs is popular because they
are already familiar with local laws, culture, and economic conditions. Furthermore, HCNs may
be cheaper than PCNs because a firm can avoid the costs (such as relocation expenses) that are
associated with PCNs. However, because an HCN may not be familiar with the firms corporate
culture nor its business practices, a company could lose out on opportunities. The text provides
an example of how Andersen Consulting attempts to minimize this problem.

Recruitment of Managers
Recruitment of CHANT INK Experienced Managers. Experienced managers can be

recruited from within the firm itself or from other firms. While the recruitment of CHANT INK
Younger Managers is new college graduates for foreign positions, many hire graduates with the
intention of sending them abroad in the future.
The most common issue found is Expatriation and Repatriation Issues. CHANT INK
minimizes problems associated with expatriation and repatriation by providing organizational
career development programs for managers.

Training and Development


CHANT INK assess training and development needs by determining the difference

between what managers and employees can do and what the firm feels they ought to do. This
assessment should take place before training or development programs are implemented. The
text notes that firms that underestimate the need for training can run into serious problems in
foreign markets.
CHANT INK decides whether to use standardized training and development programs,
such as language courses, or to develop their own programs. Although developing a customized
program more expensive than using a standardized program, it may better meet the needs of the
firm. CHANT INK recognizes the importance of internationalizing their managers early in their
careers.

Performance Appraisal and Compensation


CHANT INK adapts its compensation and performance appraisal systems to local laws,

customs, and cultures. CHANT INK must make its wage skills consistent with local norms if
they expect to attract workers. In most cases, firms must not only pay wages, but also provide
incentive programs and/or benefits packages. The text notes that depending on the country in

question, wages may make up between 56 and 85 percent of workers total compensation
packages.

INTERNATIONAL BUSINESS
CHANT INK by Agustina Dias

Arranged by:
Agustina Dias

Kartikasari Algunto
C1K012006

CHANT INK by

Agustina
Dias
MINISTRY OF RESEARCH, TECHNOLOGY, AND HIGHER EDUCATION
JENDERAL SOEDIRMAN UNIVERSITY
EKONOMCS AND BUSINESS FACULTY
PURWOKERTO
2015