Case Document

BORNEO ORANGUTAN SURVIVAL FOUNDATION (BOSF): BUILDING TRUST IN DIVERSE STAKEHOLDERS

The case demonstrates the importance of a Value Proposition for a Non-Profit Organization in shaping the organization in order to prevent them from escalating into a crisis and improve performance. The main purpose of the case is to foster a thoughtful organizational transformation through the development of an organization value proposition.

While many cases shown the importance of a value proposition from profit organization. This case illustrates that the concept of value proposition can be used to derive a purposeful organizational change and increase performances.

Author

Ir. Yanthi Rumbina Ianova Hutagaol, M.Acc., Ph.D.

Ir. Yanthi Rumbina Ianova Hutagaol, M.Acc., Ph.D.

PT ODG INDONESIA: MEASURING THE VALUE OF AN INTANGIBLE ASSET COMPANY IN A MANAGEMENT BUY OUT

The target asset for this research is PT.ODG Indonesia (Company), a foreign investment company that was established in 1991, owned majority by a foreign investor of O’Donnell Griffin Australia (80%) (major electrical contractor in Australia) and its Indonesian partner, PT. Anugrah Daya Pratama (20%) in its business of construction service in mechanical, electrical, and fire protection. Since it was established and operating until 2009, the company has experienced several merger and acquisition in the corporation level of the foreign shareholder, which latest control and owned by Tyco Corporation, a Top 500 fortune U.S Company.

In 2007, the company was approached by Tyco Corporation and was asked to signed on a non-disclosure agreements in a lead for selling the business through a bidding over several companies including, Glendale, which were financially ran by a private equity investor of Aurous Capital, and ODG Australia themselves in hoping to fully owned the company, and other companies as well. Over several months, Glendale has reached in becoming its top bidder and working over various transactions in determining their SPA agreements with Tyco, but was later withdrawn in buying the company. Under a new management of Tyco, the company are able to maintain good work relationship to at a point of 2009, where Tyco has decided to sell ODG once more with a new other option of a Management Buyout (MBO). Therefore, once again, Tyco held a bidding to several companies, including PT.ODG Indonesia where their relationship lead to difficulties to one another as ODG position themselves as a buyer and an employee that they also have to manage documents for other potential buyers.

Author

James Bartle, MBA

James Bartle, MBA

CV IDEAS: GROWBOX – STRIVING FOR SALES GROWTH

Growbox is a small creative industry located in Bandung. It was established in 2012 by four young individuals who wanted to be self-employed. Their idea of a business was to produce a media where mushrooms could grow. They sold the media in an attractive package, in the form of a box that was called a growbox. By buying a growbox, customers could experience growing mushrooms on their own. They were targeting people who had fun in growing plants and people who were interested in plants that had medicinal purposes.

Bandung was considered as a city in which the government put forth an effort in developing the creative industries. Most of the creative industries in Bandung were small. Approximately 96 percent of the creative industries had fewer than 50 employees. However, the revenue was quite fantastic. In a 2008 study, 19 percent of the industry had revenue of more than US$ 500,000 a year.

Growbox has been promoted many times in newspapers, in magazines, on TV, and through online media. Growbox participated in 16 exhibitions in the year 2013 alone or a total of 19 exhibitions from late 2012 to early 2014. It has won some business awards and prizes. Despite all of these achievements, there has been no significant growth in sales for the past sixteen months, particularly for the white growbox that was introduced to the market in 2012. There seems to be promising sales for the new products introduced (pink and yellow growbox).

It was a challenge for Annisa, as the finance and marketing manager of Growbox, to solve the problem of having almost no profit after operating for sixteen months with thousands of products having already been sold.

Author

Dr. Stephanus Remond Waworuntu, MBA.

Dr. Stephanus Remond Waworuntu, MBA.

Dr. Ronny Kountur, M.Sc., MM.

Dr. Ronny Kountur, M.Sc., MM.

CONNECTING ACCOUNTANTS TO SUSTAINABILITY REPORTING

The case study explores the ways the National Center for Sustainability Reporting (NCSR) introduced sustainability to accountants and connected accountants to sustainability. The connection between accountants and sustainability was defined as the responsibility and knowledge development of accountants in sustainability reporting. Sustainability reporting needs systematic monitoring and control to qualify the resulting report as a form of accountability delivery. Systematic monitoring and control is a normal process that accountants in companies conduct. The reporting involves the disclosure of investments and costs related to sustainability. This information was normally collected and reported by accountants. However, as sustainability reporting itself was an emerging accountability form in Indonesia, the connection between accountants and sustainability reporting needed to be established. This case study focuses on how NCSR established the connection between accountants and sustainability reporting.

Author

Dewi Fitriasari, Ph.D, CSRS, CMA

Dewi Fitriasari, Ph.D, CSRS, CMA

PT. MARTINA BERTO : IPO VALUATION

It was September 2010, more than a year since PT Martina Berto’s owners decided to take the company to another level of its life cycle, to be a public company. Almost all necessary requirements for going public had been prepared. PT Martina Berto’s management had worked flat out to prepare all documents and appointed advisors required by Badan Pengawas Pasar Modal dan Lembaga Keuangan (Bapepam LK) to register PT Martina Berto initial public offerings (IPO). It was a massive work for the management. However, Bryan David Emil, the CEO of PT Martina Berto, thought that those hard works were worthy. He believed by taking PT Martina Berto going public was the right way for the company to achieve its vision as a leading company in beauty and spa industry in Indonesia. Getting fresh cash from IPO for funding its long term strategic plan was one thing, but imposing a good corporate governance practice in the company was the main reason for Bryan why going public was chosen. He believed that good corporate governance would ensure the company sustainability.

Author

Ir. Yanthi Rumbina Ianova Hutagaol, M.Acc., Ph.D.

Ir. Yanthi Rumbina Ianova Hutagaol, M.Acc., Ph.D.

PT JAMSOSTEK INDONESIA : RISK MANAGEMENT

It’s been 7 years since 2004, but Law proposition (Rancangan Undang-Undang) about Badan Penyelenggara Jaminan Sosial (BPJS) had not yet been completed. This bill was a mandate from UU No. 40/2004 about Sistem Jaminan Sosial Nasional (SJSN), ratified by (former) President Megawati Soekarnoputri. If the law proposition about BPJS was completed, this would become a holding institution that administered four state-owned insurances, which consisted of health insurances, safety insurances, pension insurances and life insurances.

This settlement was collided with oppositions based on the legal entity form of BPJS, whether these four BUMN insurances: PT Jamsostek, PT Asuransi Kesehatan Indonesia, PT Asuransi Sosial Angkatan Bersenjata Republik Indonesia and PT Dana Tabungan dan Asuransi Pegawai Negeri would be merged. In one hand, the constraint in terms of legislation was the unfinished harmonization of several regulations such as UU No. 3/1992 about Jamsostek and UU No. 11/1992 about Pension Fund. Pension Fund was still voluntary and not mandatory. Some laws were still overlapping and burdensome to employers. On the other hand, not all companies provided pension insurances for employees and solely relied on Jamsostek.

On October 2010, PT Jamsostek resisted the merger of four State-Owned Enterprise (BUMN) insurances into one Badan Penyelenggara Jaminan Sosial (BPJS). Four BUMN insurances had differences from characteristics of participants, programs, and most importantly was the difference in how each company covered risk exposures such as market risk and liquidity risk.

 

Author

Ir. Dewi Tamara, MM., MS.

Ir. Dewi Tamara, MM., MS.

PT INDOGAS: BUILT-OPERATE-TRANSFER (BOT) PROJECT FINANCING

This case study was provided for business school students for illustration and discussion on project finance topic. The term “Project finance” can simply be define as a financing arrangement for an economically and independent project that uses everything that the project can offer as its collateral for assessing the risk and the basis of its return of investment.  This assessment can also be called as "limited recourse" financing because the capital provider are given only a limited recourse against the project borrower assets.

Furthermore, this financing assessment for a project differs with the traditional corporate finance concepts, whereby typically the lender will look to the strength of a company’s historical balance sheet to retrieve their funds back, as in a project loan the creditor will look almost solely toward the expected cash flows from the project for its repayment of the loan.

Project finance itself can be arranged in different structures/schemes in which one of these schemes is called as a Built-Operate-Transfer (“BOT”) arrangement.  This case of “PT. Indogas: BOT Project Financing” is an example of a BOT project financing arrangement that had been carried out for a gas infrastructure production facility in East Java, Indonesia.

Author

Robbi R. Sukardi, MBA.

Robbi R. Sukardi, MBA.

CARREFOUR INDONESIA: GROWTH VIA ALFA ACQUISITION

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).

Author

Peter S. Aripin, M.E.S, MBA.

Peter S. Aripin, M.E.S, MBA.

BANK BTN: TRANSFORMING BUSINESS THROUGH BSC AND IPO

Bank BTN’s Management has initiated to transform the bank into world class financial institution. Two strategic moves have been taken by Bank BTN; which are implementing Balance Score Card (BSC) and going public (IPO). The Bank started to develop BSC on November 2008. A year after that (on November 19, 2009), Bank BTN listed in Bursa Efek Indonesia with IPO’s price of Rp. 800 per share. The IPO has been an accomplishment as the price of Bank BTN’s share has jumped up to Rp. 1.870 per share (October 5, 2010); an increases of 134%. These two strategic business moves are expected to have long term impact to sustainability of the organization as the management aims for becoming world class bank in 2018.

Author

Dian Triasurya, MBA.

Dian Triasurya, MBA.

IPO KRAKATAU STEEL

PT Krakatau Steel Tbk, one of the strategic state-owned enterprises, initiated its public offering on 10 November 2010. Only several minutes after its opening, the price rocketed to Rp  1,270 from the initial price of Rp 850. This stopped because of the auto-rejection mechanism on the trading floor. The market capitalization reached Rp 20.03 trillion, the biggest capitalization for the IPO company. The initial price reflected severe underpricing; the price on the black market reached Rp 1,500 compared to the official Rp 850.

The allocation of the stocks was also intriguing because it was suspected that the allocation mostly favored foreign instead of domestic investors. A citizen lawsuit was opened to cancel the Krakatau Steel IPO.

This case study highlights the IPO of Krakatau Steel from the capital structure’s point of view, using EPS and EBIT curve.

Author

Prof. Dr., Adler Haymans Manurung, ME., M.Com.

Prof. Dr., Adler Haymans Manurung, ME., M.Com.

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