Case Study #4 Marketing Management

ANALYZING BUSINESS MARKET:

CASE STUDY OF ASIAN AGRI Asian Agri and The Future of Palm Oil

Presented by:

Dian Atika

Rafika

Rery Indra Kusuma

MM UGM Jakarta Executive B Class 27 C

Case Summary

Main Issue

Problem Statement

Analysis

Recommendation

History

Year Activities

1979 Sukanto founded ASIAN AGRI; 10,000 ha

1984 Built a mill for extraction CPO and plam kernels

1986 Asian Agri began participating integrating smallholder former plasma program

1989 Asian Agri expansion 30,000 ha

1989 – 1999 Expanded its growing R&D, husbandry practices, fertilizer inputs for different types of soil, higher-yield, pest and disease controls, upgraded its refining capacity, built a plant for production of margarine and shortening.

2010 (at the time case

was written)

Plantation and Mills, Refining and Exporting, Customer and Markets.

Holding Group of Asian Agri: RGE (Royal Golden Eagle) 1. APICAL: Asia Pacific Resources International

Limited 2. Sateri International 0 3. Pacific Oil & Gas

ASIAN AGRI TRIED TO ENTER CONSUMER MARKET TO GROW THEIR BUSINESS TROUGH APICAL ONE OF THEIR HOLDING GROUP.

Asian Agri Challenges in Up Stream market:

1. Sustanaibility of Resource

2. Plantation Expansion

3. Enter the Consumer Market or Focus on Business Market?

NGO Critics to CPO company: ◦ Allegedly forest biodiversity/endangered species

◦ Deforestration, high leve of carbon

◦ Conflict indigenous population and grower

Result Pressure on Actual Business:

CPE companies had stopped sourcing palm oil accused of environtmental mismanagement

Calling on bank and investment fund

Ernomous challenges on Plantation Expansion:

Two years freeze on new land concession in May 2010, limited land

Country Risk

Poverty

Infrastructure was poor

Controversial land-right disputes between grower and indigenous population

Complex govenment concession process

Opposition from NGO

Asian Agri had started enter the consumer market trough their holding company APICAL.

Downstream market will give them several benefits:

Force the company to mature

Customer and process management

Capture more value utilize all part of oil

But...

Is it worth to be focussed on consumer market while Asian Agri had upstream competitive advantages?

Should Asian Agri aggresively expand the plantation despite all the challenges on land expansion? And make their upstream business STRONGER?

Should Asian Agri put more effort on their downstream business?

Asian Agri had already started to apply below strategy:

Leverage its foothold, expanding 160,000 into 300,000 ha by 2015. Enhance its upstream competitive advantage

But would bring many practical challenges.

Develop more trading and refining operation or market a portfolio of branded products

Transfer Asian Agri’s plantation assets to its sister business, APRIL, a highly succesful pulp and paper operator.

Give best effort both to upstream and downstream business as their capital also strong.

The strategy is on the right track, in term of expanding branded product they should create more serious plan.

Continous improvement on resource sustainability. It improved the company profile and assured the company sustainability.

Thank You....