XI.

RESOURCES TO BE DEVELOPED

Resources are inputs into a firm’s production process, such as capital equipment, the skills of
individual employees, patents, finances, and talented managers. Also, this potential is realized
when resources and capabilities are valuable, rare, costly to imitate, and non-substitutable (Hitt,
Hoskisson, & Ireland, 2016). The keys that need to be implemented in PT. Indah Kiat Pulp &
Paper in order to gain competitive advantage by strengthen the resources are using technology in
order to expose the environment conservation program of the company and increase global
market share.

In order to cut the production of cost manufacturing, plant have to be moved to a nearby
supplier by combine both technology and paper to create new whole new product to retain its
growth. Based on those keys, the following statement will be elaborated much further with the
aim of strengthening these arguments.

 Human Resources
In order to improve its efficiency and effectiveness in Human Resources, it must be
improved in recruitment, selection, training, promotion and grievances handling of
personnel. Also, several payments of compensation gratuity, termination of services are
the few issues that have to be solve effectively to retain most employees in PT. Indah Kiat
Pulp & Paper.
 Innovation Resources
PT. Indah Kiat Pulp & Paper need to conduct much further in innovation program is
identifying the problem that need to improve the environment friendly program,
producing seed crops which are much more genetically superior than before and
discovered other ideas and getting feedback from the communities based on their mission
which is use cutting edge technology in the development of new products and
achievement of mill efficiency.
 Culture
The right method is to discuss, evaluate long-term planning and also decision-making
processes by PT. Indah Kiat Pulp & Paper’s GCG principle. Likewise, it’s critical that it
must find employees that fit the culture, but employees whose personal culture will fit the
 organization. It must conduct evaluation the needs of core values that impact to
company’s culture and finding people to fill those needs, whereas the combine legal and
management frameworks in order to better conserve and preserve the core values of these
resources. Culture goes both ways and it takes effort from both sides to make it work.
 Mill’s Equipment
PT. Indah Kiat Pulp & Paper needs a resources development to identify development
work in design a better manufacture of equipment which would be simple but easy to
operate and also maintain in order to cut cost in production and boost the profit of the
company.
XII. ACTIVITY TO BE REFINED

Product Development

Economic growth in 2018 as projected by the World Bank still gives us

optimism. In 2018, the global economy is projected to grow about 3.1% or stronger
than 201, while the Indonesian economy is estimated to grow around 5.3%. With the
support of domestic economy and focus on high demand from the Asia market, in the
future the company still has prospects to grow and the Company is expected to be
able to increase its sales and overall financial performance to achieve the Company’s
business target in the future. In 2018 the Company sets the target to increase net sales
and net income about 20% from year 2017’s achievement.

The Company’s performance is highly affected by the fluctuations in the

price of pulp and paper in the world market which are influenced by demand and
supply in regional and international levels. Today, consumption of pulp and paper in
Asia region is still much lower than consumption in Europe and America. With a
better economic growth and rapid population growth in the Asia region, the
Company predicts that demand and price of Company’s products will continue to
increase.

With the globalization of world economy, the Company is required to

improve the competitiveness of its products through efforts to increase efficiency and
professionalism of the company. Also inevitable that the market areas of business
pulp, paper, packaging and other paper products industries which managed by the
Company also faces a harsh competition from local as well as overseas market.
Things that play a great influence in domestic and international market are trade
mark, product quality, distribution and price. Therefore, the Company has to make
some efforts in all aspects to enhance the Company’s ability in order to be able to
confront the competition and maintain the Company’s position as one of the largest
integrated pulp and paper producer in the world. One of the efforts is to develop
products that has a high added value and environmentally friendly.

Marketing Strategy

In addressing the challenges of 2019, The Company need to take some

anticipative action by concentrating on the existing potential market through product
mix strategy that has added value contributing to better margin , country mix strategy
and developed new market and strengthen the basis for potential new customers, also
consistently and continuously improved products quality in order to exceeding our
customers’ expectations; increasing the productivity level and daily operational
efficiency by implementing strong budget control, maintaining balance supply of raw
materials as well as implementing the Good Corporate Governance (GCG).
Financial Aspect

There is some room for improvement in INKP’s Financial aspect, which is their
Average Collection Period and their Inventory Turnover.

Average Collection Period INKP vs

Industry Average 2017
120
100
80
60
40
20
0
INKP Industry Average

Average Collection Period is a ratio to measure the period of receipt of receivables

(account receivables) from other entities to the company within one year. This ratio
becomes one of the benchmarks for the level of performance of companies in converting
their receivables into cash. Although both are parts of current assets, cash has higher
liquidity status than account receivables. This is because by using cash, the company can
pay interest or distribute dividends. The lower the Average Collection period, the better the
performance of the company. As we can see from the graphic above, INKP has higher
Average Collection Period ratio compared to the other company in the Pulp & Paper
industry. INKP’s Average Collection Period is 102 days, while the industry average is 78
days, this indicates that INKP is still below average in terms of the ability to convert
receivables into cash compared to other companies in the same industry in Indonesia. INKP
is advised to immediately get a solution for this because it is feared that low level of
Average Collection Period can disrupt the company's cash flow.
 Inventory Turnover
5

0
INKP Industry Average

As we can see from graphic above , INKP Inventory Turnover Ratio in 2017 is
2.34x, which means that every year the inventory turnover is 2.34x in one year or every 156
days. This is not good, because its below the industry average, which is 4.03x or once every
90 days. INKP must improve a little because the low inventory turnover in a company can
result in high storage costs and there is a possibility that products / inventory will become
obsolete.