Business Strategy of Indah Kiat Pulp and Paper Perawang Mill, Riau, Indonesia using PESTLE, Porter’s Five Forces, and SWOT Analysis under SOSTAC® Framework

Authors

  • Gery Azhari Putera  Magister Management Department, University of Bakrie, Jakarta, Indonesia
  • Jerry Heikal  Magister Management Department, University of Bakrie, Jakarta, Indonesia

DOI:

https://doi.org/10.32628/IJSRST218624

Keywords:

PESTLE, SWOT, SOSTAC, Strategy, Business

Abstract

According to the company annual report (INKP Annual Report, 2019), PT. Indah Kiat Pulp and Paper (INKP) experienced a decrease in net sales of 3.4% and net profit of 53.4% from the previous year. The decline was followed by the Covid-19 pandemic which could affect the company's sales and profits. The study was conducted using a descriptive approach in order to capture the phenomena that occur through analysis of current conditions both internal and external using PESTLE, Porter, and SWOT analysis. Afterwards, it formulates the company objective, strategy, tactics, action, and evaluation or control using the SOSTAC® framework based on the analysis result. Data are obtained from interviews, observations, documentation, and publication reports. The results of the research describe that the predominant internal strategy factors on the Strengths of INKP are the product quality and production process efficiency, and the Weaknesses are product distribution and its distribution channels. Meanwhile, the predominant external strategic factors on Opportunities are other needs in pulp derivative product, availability of raw materials and fiscal policy, and as for Threats are a decrease in fine paper demand and technology adaptation. Using the Cartesian SWOT diagram, it is found that the results of EFAS and IFAS are in the ST main strategy quadrant, which is Diversification. Based on the results of the analysis, it can be formulated that the objectives of the INKP strategy are to make diversification product such as rayon fiber with masks as the final product from pulp as the raw materials in 1 year and shifting production from 56% paper and 43% pulp to 45% paper, 34% pulp, and 20% rayon fiber in 3 years to maintain sales volume and gain increased profit. The corporate level strategy is a diversification product while the business level strategy is a differentiation product in accordance with Porter's Generic Matrix. This investment has a positive value of both CAPM and NPV while CAPM has 0.0708 value. As for the IRR, the rate of return is 39.87%. Planned tactics and actions using project management with Gantt Chart within a project period of 1 year in the main activities of building production lines and marketing. Control and evaluation are carried out through the implementation of targets or KPI in accordance with work functions. EBIT and EBITDA is used at the final level of overall production and marketing.

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Published

2021-12-30

Issue

Volume 8, Issue 6, November-December-2021

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Research Articles

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How to Cite

[1]
Gery Azhari Putera, Jerry Heikal "Business Strategy of Indah Kiat Pulp and Paper Perawang Mill, Riau, Indonesia using PESTLE, Porter’s Five Forces, and SWOT Analysis under SOSTAC® Framework" International Journal of Scientific Research in Science and Technology(IJSRST), Online ISSN : 2395-602X, Print ISSN : 2395-6011,Volume 8, Issue 6, pp.252-270, November-December-2021. Available at doi : https://doi.org/10.32628/IJSRST218624