On August 2007, Mr. Eddie Cendana, the CEO, was very irritated when he received another complaint from one of the most important clients of PT Edpmedia Multimitra Primanusa. There were increasing complaints and dissatisfaction from customers over the last few months, so he decided to initiate the Six Sigma program to improve the quality for the company.

The Six Sigma project at PT EDPMEDIA started in January 2008 using the DMAIC 5 stages approach, namely Define, Measure, Analyze, Improve and Control. In the first stage, PT EDPMEDIA had set the CTQ (Critical to Quality) and CTP (Critical to Process) targets, which were based on results of the extensive customer and employee surveys. They had discovered that the CTQ and CTP issues were employees’ workload, productivity and training. The surveys proved that the three factors contribute the most significant percentage towards customer satisfaction and royalty. In the second stage, a number of measurement and capability tests were conducted. The results showed that the company must start immediate improvements to employee productivity. The analyzing stage indicates that the employee productivity figure was affected by:

1. 45% - workload factor;
2. 32.5% - lack of training;
3. 30% - job satisfaction.

When the project neared the end of its implementation stage in early 2009, the company employee productivity had increased to 3.69 from the initial target of 3.5. Another related indicator such as Hour Service Rate had also increased close to 75% from the target of 70%. So the CEO claimed that the Six Sigma project initiative was successful though more improvements and optimal benefits were anticipated further in the future.

This case provided students an open forum to discuss and analyze the factors and reasons why senior management at a major corporation and a public accountant firm gave false or manipulated financial statements. The case gave an interesting human interest aspect to be considered and values, belief and integrity that leaders and public auditors must have.

The real story asked and provoked students to investigate and questions what were the motives and attitudes that professionals and leaders had around this publicly listed company. The case could be used as a debate forum to find out what are the factors and reasons that lead to the collapse of this corporation or more specifically was there an accounting and/or financial “fraud” involved in the case? What were the causes of this major catastrophic corporate collapse? The failures usually arise from the cumulative effects of many small failures, any of one of which, if detected in time, could have been prevented. Were the many small failures of this corporation being ignored or swept under the “blankets”? Is it correct to judge that in this case, there was a failure of leadership, culture, internal controls, internal audits, and corporate governance?  Was the board of directors lying? What types of controls or safeguards that a public listed company or a regulator like Indonesian Capital Market Supervisory Agency (Bapepam: Badan Pengawas Pasar Modal) must have to prevent similar case(s) to happen again?

In our class discussion, many say that the fraud was due solely to bad individuals who have decided to cheat the public and the top management was so brave to issue bonds (to raise public fund) in hind sight of the performance of the corporation. Another proposition could be that the culprit was the economic crisis that happened to this country. Or was it “mis-managed” or it was all about the “greed” or “conspicuous” character of the leaders/professionals.

While many of us think that senior executives always act ethically, legally, and honorably, and market economies must be able to function even when personal greed and ambition motivate executive to step across legal and ethical lines. Greed and ambition are not new phenomena in this country. Is it being too idealist to believe that all senior executives will act to a sainthood or godliness standard? Public corporations and regulators need control mechanisms /laws/regulations that ideally dissuade executives from acting down to their animal instincts, and can also detect as well as prevent rapidly when actual illegal behavior/activities were initiated. If there is no economic crisis in Indonesia, may GRIV still have existed and grown well? If proper and strict organizational and government control systems were in place and also their vital roles and functions were installed, could this not happen?

To increase market share and strengthen its position as a market leader in modern retailing, PT Carrefour Indonesia acquired a 75% (Rp 647 billion/US$87 million) stake in PT Alfa Retailindo from PT Sigmantara Alfindo and Prime Horizon in January 2008. The acquisition gave the company the right to operate all 29 supermarkets of the AlfaMidi chain, a public company with a market capitalization of about US$ 108 million, had more than 11,000 employees. Following the acquisition, Carrefour renamed the Alfa supermarket outlets to Carrefour and Carrefour Express and generated Rp 9.2 trillion in revenues: Rp 7.2 trillion from Carrefour and Rp 2 trillion from Alfa.

The Indonesia Retailers’ Association (APRINDO-Asosiasi Peritel Indonesia) predicted that Carrefour will dominate the national retail market in Indonesia. About a year after, the Business Competition Supervisory Commission (KPPU-Komisi Pengawas Persaingan Usaha) conducted an initial investigation process of Carrefour's business expansion and in November 2009, KPPU declared that PT Carrefour Indonesia was proven legally and convincingly to have violated Article 17 Paragraph 1 and Article 25 Paragraph 1(a) of Law No. 5/1999 on the prohibition of monopolistic and unfair business competition. KPPU ordered Carrefour to release all the stakes of PT Alfa Retailindo Tbk to parties not affiliated with PT Carrefour Indonesia no later than one year after this decision and to pay a fine of Rp 25 billion.

To challenge this verdict, PT Carrefour Indonesia filed a civil case at the South Jakarta District Court, which decided to cancel all KPPU decisions related to PT Carrefour Indonesia in February 2010. The company was free from the divestment order and fines.

One of the main reasons used by PT Carrefour Indonesia to win in the Court was the definition of retail market and the results of market data researches.

This case provides students an opportunity to discuss and analyze their understanding about economic information in decision-making, market structure systems, and monopolistic issues, as well as to discuss corporate growth strategies. This enables students to be aware of contemporary issues in business restructuring and corporate actions, particularly recent corporate mergers and acquisitions in Indonesia.

The class session would be lively if the instructor uses the debate and open forum format. Role-play would be another method that could be used to discover the assumptions and perspectives of each actor (i.e., KKPU, Carrefour, Alfa and government, competitors, etc).