WIJAYA KARYA (WIKA): DIVERSIFICATION STRATEGY

WIKA started the business from electrical and pipe-installation for houses and buildings, they realized that WIKA would not become a big-corporate if only relied on electrical-business. Now, WIKA’s projects are various from high-rise building, fly-over, toll-road, railway until solar water heater (SWH) and LPG tank. Also WIKA becomes a producer of automotive-component. This was different with other State – Owned Company which usually avoid diversifying from its core-business. The latest diversification was entering the Engineering Procurement Construction (EPC) – business where they believed this would be a future business for WIKA, after preliminary study in 2002, the management decided to enter this high-technology business.

The company plans to acquire toll-road operators as well as engineering consultancy company WIKA claims it has built approximately 30.0% of government-owned 10,000-MW power plant projects. The company plans to acquire a 70.0% stake of PT Catur Insan Pertiwi (CIP), a mechanical engineering and engineering consultancy company specializing in power plants. Going forward, WIKA also plans to acquire toll-road operators and mining contractors, apart from its plan to enter international market. It looks very busy of diversification. What strategies will be implemented to reach the goals? What opportunities and challenges will be experienced by WIKA after diversifying its business? How best could WIKA execute its diversification strategy?