Corporate strategy of PT Argha Karya Prima Industry, Tbk

Date of Publication

1998

Document Type

Oral Comprehensive Exam

Degree Name

Master of Business Administration

Subject Categories

Business Administration, Management, and Operations

College

Ramon V. Del Rosario College of Business

Department/Unit

Decision Sciences and Innovation

Abstract/Summary

PT Argha Karya Prima Industry, Tbk. (AKPI) is the largest and the leading flexible film-packaging manufacturer in the Southeast Asia Region with total capacity of 70,000 tpa (tons per anum). During the last couple of years, AKPI had a mission to become a world clas player in the global flexible film-packaging industry. To achieve its mission, AKPI is continuing to expand into several new markets such as East Asia, Middle East and the European market.

Aside from its Film Division, which produces many kinds of flexible film-packaging, AKPI also has Converting Division which produces the packaging itself. In terms of flexible film-packaging production, AKPI manufactures the widest range of films for flexible packaging in order to cater to the needs of all the market segments. In its Platic Film Division, AKPI produces BOPP (Biaxially Oriented Polypropylene), rigid food grade PVC (Poly Vinyl Chloride), PVdC (Poly Vinylidine Chloride), high barrier Acrylonitrile, BOPET (Biaxially Oriented Polyester) and CPP ( Cast Polypropylene) films. AKPI is also comsidered as a mahor flexible packaging supplier to inernational food industries with particular strength in noodle, confectionery, snack and biscuit packaging, as well as non-food packaging.

AKPI's core is BOPP film which is used in the world due to its economical advantage, resulting the BOPP film application in the flexible packaging industry is getting more and more popular. BOPP film is made Polypropylene (PP) resin. For BOPP films, AKPI has more than 27 different product tyoes which are marketed under the brand name of Arlene. comprising of six categories: Plain, Heat Sealable, White/Pearlescent, Metalized, Matte and PVdC coated films. The latter has an axceptional barrier against moisture, gas and aroma.

For rigid food grade PVC film, AKPI has 23 different product types which are marketed under the brand name of AVin, comprising of three categories: Plain, Pigmented and Metalized films. Their high barrier film made from Acrylontrile copolymer and differentiated 3 product types which they market under the name of Arex. Not only do these films have a high chemical resistance characteristic, but also have a good gas barrier while being environmental friendly. It is ideal for pharmaceutical, cosmetic and special food applications. The most recent additions to AKPI product line are BOPET film marketed under the brand name of Areta and CCPfilm under the brand name of Arcylene. Just within the year, BOPET film comes in seven types which is an outsatnding achievement for AKPI's R&D. Those types areussed for, among other, lamination, metalizing, cable insulation, plywood and hot stamping.

CPP film is used mainly as inner sealing layer in packaging. CPP film'd beneficial properties include low heat seal temperature, high selaing strength, low static and excellent metal adhesion.

The important element of AKPI's philosophy of being market oriented is the diversification of market. Therefore, AKPI constantly seelks to identify the needs and constantly diversify its product range. The mangement believes that the greater the scope of the market, the more products and services they will deliver, and finally, the stronger footlhold they would gain.

AKPI has invested in manufacturing or trading operations in overseas markets. A strategic affiliate named Stenta Film Sdn. Bhd was establised in Malaysia to cater to the local markets and the neighboring Asian countries. Also, it has set up two subsidiary offices in Hong Kong: International Resources (HK) Ltd., and the United States: Internationa Resources Corporation to build international competitiveness as well as strengthening thier presence abroad.

Today, with the support of their worlwide marketing activities, they also have positioned themselves as a viable competitor in the overseas markets. Together with their affiliate, Stenta Film Sdn Bhd. in Malaysia, more than 50% of their total production volume is expected to 26 countries around the world.

In 1996, AKPI achieved total sales amounting to Rp 288.38 billion, an ancrement of 16.12% compared to 1995. This was largely due to the additional capacity brough about by new BOPP and CPP equioment. Other significant factors responsible for this improvement were export sales of both film and converting products. total export constituted 30.18% of its total sales. Net profit went up primarily because of the increment in gross profit and decrease in no-operating expenses.

The increasing sales in East Asia and North America regions are exemplary indications that their superior quality has been recognized by prominent international customers.

After Trais Sentosa, AKPI is Indonesia's largest BOPP film producer. It controls 43% of the market with a production capacity of 35,000 tonnes. The raw material for these plastic firms is PP (Polipropylene) resin which represents around 75% of the total production cost. Most of the PP resin used is bought from PT Tri Polyta Indonesia and the redt is still being imported from many countries such as France, Canada, Australia, Japan, USA and Korea. And as this industry is a highly sensitive one, it needs high quality of raw material to amke the production process smooth. The risk of scarcity of raw material for the company is very small since such material is available widely from many countries and also already produced by the domestic producers (PT Tri Polyta Indonesi, Tbk.)

The company imports some of its raw materials and equipment from abroad, that's why, the stability of dollar currency has been a critical factor for AKPI. From Augist 1997, due to attacking to the Asian currencies, Indonesian government has apploed floating foreign exchange rate, Thus Rupiah currency has been depreciated to the lowest level ever. This condition will finally have severe impact to the local industries, especially those which primarily depend on importation. Therefore, the worsen economic condition has made the future company condition becomes unpredictable. The economic growth is predicted to be 0% from 1997-2000. Despite the recent respite for the rupiah, the oultook for Indonesian economy remains bleak. The announcement of a moratorium on private secto debt reflects the current reality- the bulk of Indonesian corporates are unable to service debt obligations at current exchange rates. As such, the question is no longer one of the corporate growth but rather of survival. Because of the condition explained above, AKPI should really consider if they still want to add more product lines since this strategy will no longer match with the present condition. On the other hand, they should emphasize more on cutting down the cost while at the same time maintaining the quality standard. That is why AKPI should really find better ways so that it can sustain, stay competitive and hopefully, improve its performance as well.

Abstract Format

html

Language

English

Format

Print

Accession Number

OCE0433

Shelf Location

Archives, The Learning Commons, 12F Henry Sy Sr. Hall

Physical Description

v, 77 leaves ; ill. ; 28 cm.

Keywords

Plastic film industry--Indonesia

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