Strategic Management Analysis: Javara III
Chapter I Introduction
Javara Indigenous Indonesia, formally known as PT Kampung Kearifan Indonesia, is an Indonesian company producing and selling spices and indigenous agriculture produce to domestic and international marketplace. The name itself derived from “Jawara” meaning “Champion” in Sanskrit, which are reflected as their main value which ensures quality products for their customers. They are one among other companies that compete in this multi-million-dollar industry. However, the name Javara itself is actually their brand name in a sense because the brand encompasses quite a large reach. From producing raw agricultural produce such as spices, grains and oatmeal, to processed goods such as prepackaged coffee and even rice crackers. The brand also has branching activities in food and beverages; and education sectors with its Dapur Javara, and Sekolah Seniman Pangan.
Javara has 2 mission points in doing their business process in this industry. The first is to conserve the rich, Indonesian agricultural heritage alive and helping Indonesian consumers to shift their preferences more towards locally sourced produce. The second point is to keep small household farmers and gatherers in the business and help them gain traction as living legends in effort to maintain Indonesia’s rich agricultural heritage alive. Aligned with the founder visionary, Javara aims to revive agricultural heritage that has since been forgotten or extinct. Underlining the importance of perseverance, Javara strives to expand their community in hope to support farmers and gatherers in needs.
In value, Javara held 3 important points each putting emphasis on quality and welfare.
- Good food is leisure, meaning that in producing quality produce, Javara is able to deliver food that is comforting to their table.
- Good health is a treasure, continuing from the point before, Javara is able to not only deliver taste, but also increase the value of life for customers through nutritious products.
- Good deed is a pleasure, because with every transaction customers make, they contribute to the welfare of farmers and gatherers. Through this continuous process, Javara is able to benefit everyone.
The history of Javara itself is close to the energy, spirit, and personality of its founder, Mrs. Helianti Hilman. The business model designed for Javara is effective and spot on for the company’s core value to say the least. As a social Entrepreneur, she is using a Co-operative business model for Javara and aims to help and build strong relationships with its partner which is dispersed across Indonesia.
This cooperative nature is reflective of Mrs. Hilman past employment experience. Given the opportunity by her colleague, she is introduced to traditional farmers and gatherers who still use indigenous agriculture methods as means for production. She is particularly concerned regarding the almost extinct agricultural cultivation methods used by generations across the nation. As consultant for rural development, her understanding helps her in developing the right strategy for each supply chain partner. Her leadership enabled Javara to yield consistent positive feedback not only from customers but also from her business partner and the government.
The geographical archipelago which made up Indonesia is rich with unique varieties of produce. Take rice for example, after continuous learning over the years, Mrs. Hilman realize the capability to create niche market for lesser-known variety of rice such as Menthik Susu, Cempo Merah, Wangi Menyan, Andel Abang, Jenggot Netep, and several other kinds of grain. Being an expert in intellectual rights, her expertise in the field along with her strong will in marketing helps her create strong trademarks which can be recognized in several regions over the world.
Javara can be enjoyed by every demographic. However, the implementation of philosophical farming in contrast to industrial farming for mass production made their product within the premium price tag. Such indication means that more or less their consumer segmentation is pretty much demographic with moderate to high income households. Other than regular households, Javara provides the option for wholesale bulk purchase that befit the needs for hospitality business such as hotels and resorts as well as restaurants.
As aforementioned, Javara keeps a close relationship with their supplier. Organic agriculture took more effort and resources than industrial agriculture. Thus, by empowering farmers and gatherers with enough funding and providing them the necessary resources, Javara is able to ensure quality and fulfill their main purpose of keeping traditional methods alive in this modern age. Javara also has expanded to artisan food industry and culinary industry, where they are doing cross business process.
Serving nicher market, Javara did not face direct competition with similar corporations who propose the same value proposition. It can be said that Javara is the market leader for organic indigenous agricultural produce with smaller scale farmers and gatherers household following suits. However, the market faces competition with substitute products from industrial agriculture producers which propose lower prices for their products. These competitors are plenty and vary in size. Among these competitions, notable corporations are PT Sumber Inti Pangan, PT Alam Sari Interbuana, and CV Lima Rempah to name a few. These companies are direct exporters of spices with various capabilities. PT Sumber Inti Pangan is a company capable of processing spices and seasonings as well as producing flavoring agents and various extracts. PT Alam Sari Interbuana exports raw spices such as cinnamon, clove, mace, nutmeg, black pepper, white pepper, turmeric, and few locally cultivated spices from foreign origin such as cocoa beans. CV Lima rempah also has similar value proposition as PT Alam Sari Interbuana, selling almost similar spices which are locally cultivated in provinces such as Nusa Tenggara. For domestic market, Javara competes with locally sourced, unbranded products available in most traditional markets.
Challenged by economical products, Javara struggles to capture the heart of domestic consumers. However, they gain international interest with government endorsement. Javara frequents promote their products through trade exhibitions as well as retail shops, and social media. In recent years however, increasing international enthusiasm opened many opportunities for Javara. One of those opportunities being the chance to open up a concept store.
Chapter II
INTERNATIONAL OPPORTUNITIES
Spice trade has been the earliest form of globalization, connecting the eastern world with the west through the needs of new taste. Now, with modern means of transportation and communication spices still retain the same importance as it has been since ancient times even growing since then. This established fact combined with diverse spices Indonesia can cultivate, along with various factors such as natural climate and local knowledge should provide enough advantage for profitable industry. However, unlike India who is among the largest exporters of spices, the geographical form of Indonesia sets a unique opportunity for this industry.
Historically, Indonesian spices are sought for in ancient times. Being an archipelago, Indonesian trade is very active. The availability of seaport enables companies to transport their goods by sea which are economically more viable than transport by air.
For Javara itself, they are unable to gain the benefit of economy of scale due to the amount of production that differs with each supply chain partner. Instead, they focused their competencies on refining quality control and producing organic, premium products. These products are desirable with increasing global awareness towards healthy diet and lifestyle.
The emerging popularity of fast food, which is monotone and bland in character is the catalyst for this movement. While fast food fits urban lifestyle, providing cheap and instant meals, it has also been recognized as a problem in modern society. The unhealthy nature of such food thus prompted “slow food”, part of a grassroot movement focused on spreading interest for traditional foods. This movement opposes overproduction and food waste that we frequently see as a result from industrialization. Philosophy of the movement which emphasizes on Good, Clean, and Fair process has its fair share of influence in Javara core value. Partaking in this movement, Javara aims to bring back the artistic and culinary value back to common households. However, this movement is not comparable to European counterparts and thus it gave opportunities for Javara to increase their market size.
Because of their limited production capability and their philosophy in reducing waste and such. Javara used multidomestic strategy to bolster their export. Understanding cultural preferences helps in developing desirable products. Javara have their own flavour catalogue for each country with that preferences in mind to help generate innovation and increase adaptability. Just like given examples where habits such as European who dipped their Biscotti in beverages, and Americans which mostly prefer sweeter products, Javara tinker their product accordingly to have a sense familiarity into their product.
To gain this knowledge, Javara do their research by various methods but their most effective means is through international exhibitions where they can also educate consumers about their products and initiatives.
Given their focus on domestic capabilities and current core competencies they have, their most preferable method to enter a new international market is through direct exports. By selling directly to consumers in new markets, they avoid expenses associated with establishing operations in new countries. This enables them to allocate the budget to invest more in domestic capabilities.
Through international opportunity, Javara hoped to gain capital and resources to enhance their innovation generation and improve local capabilities towards sustainable process.
THE CHOICES OF INTERNATIONAL ENTRY
As mentioned above, their preferred method of entry is through direct exporting. The process itself tends to be costly due to the presence of transportation cost per transaction, however it prevents costs that may arise from investment in building operations in new markets.
By working with local distributors in the new market, they reduce risk at cost of less control over the distribution process. Javara has choices to advertise and promote their products through conventional advertisement, training local capabilities to advertise, or emphasizing their effort in packaging design and quality control.
One example of Javara’s effort in direct exporting is in product quality certification. In their experience, having qualification increase products value and helps in marketing. Organic certification for example helps in reaching towards certain demographics while sustainable produce certification attracts others specific demographics. To socialize their value proposition, Javara promote themselves directly through international exhibitions.
This method of course is subject to policy made by bilateral or unilateral terms. Political agreements such as AFTA for example, motivate this method as trade with countries within the agreements such as Brunei, Malaysia, Singapore, and Thailand are subject to preferential tariff.
Several Comprehensive economic partnership agreements (CEPA) are beneficial for Javara as well, granting lower tariff or even granting free entry fee. CEPA between Indonesia and Australia granted Indonesian exporters free trade to the Australian market. CEPA between Indonesia and European Union on the other hand, yields mixed results for the government but a positive outcome for Javara. Whilst the agreements haven’t been concluded, European Union concern for sustainable agriculture bolster and the Partnership and Cooperative Agreements (PCA) in between negotiation opened the opportunity for Javara to enter European market.
BUSINESS LEVEL COOPERATIVE STRATEGIES
In the Javara value chain, they implemented vertical complementary strategic alliances. This befits Javara’s core value to empower local producers. The industry is relatively fast in consideration to its volatile pricing. The industry consists of many but small, struggling household producers. Among these household producers, Javara seeks local capabilities that have the knowledge over unique regional produce. By building strategic alliances, Javara is able to expand their local capabilities, increasing production capacity, and possibly increase variety of products.
Consolidating small household farmers means that they are able to keep prices at premium meanwhile reducing risks for farmers. Through this partnership, Javara is able to gain local knowledge from partners in exchange for technical and capital assistance, along with other administrative assistance they might need.
Presently, Javara managed to partner up with up to 50,000 farmers and gatherers scattered around the nation. Instead of integrating vertically supply chain partners and controlling production, Javara adds value through quality control and marketing. Through their initiative in keeping the industry alive, they build co-branding partnerships. Maintaining such relationships also keeps Javara from overstretching their management, making them focus better in processing products, finding others untapped local capabilities, and creating innovation. In the process, Javara becomes the link that connects customers and thousands of farmers and gatherers.
VALUE CREATING DIVERSIFICATION
Besides the core process of exporting raw and unprocessed produce, and also the making of artisanal products, Javara has diversified their business process to encompass several aspects that extend before and after production. This diversification however still dependent on main business core, making them related constrained to main core competencies. Therefore, Javara has moderate level of diversification in their value strategy.
Given the value proposition Javara has, they tried to diversify towards lifestyle with two business concepts. These concepts are part of Javara projects nicknamed “Javara Culture” and both concepts complement Javara’s main process in creating innovation for products. The first concepts involved production of food and beverages. The initiative is called Dapur Javara. Dapur Javara is one of Javara’s value chains specializing in the culinary industry. Located in Kemang, Jakarta, Dapur Javara can be said to be their research and development lab. Having direct access to gathers and tests consumers’ preferences enables faster development and reliable product innovation. The restaurant is able to generate income as well as to showcase the quality of Javara’s products.
The second initiative is another value chain which operates in the education industry, the institution is called “Sekolah Seniman Pangan”. This vocational school trains and prepares their students to become agriculture entrepreneurs. Same with Dapur Javara, this closely knitted business has cross functional capability with Javara main core competency. Trained alumni are hoped later to be Javara partners or joining Javara to breed innovation in the farming process or production process.
Chapter III
CONCLUSION
It can be said that Javara has become the leading social enterprises. Seen as relatively young enterprises, Javara is set to revolutionize food industry that tend to be consumptive. Putting the focus on social welfare and sustainable food production, the rise of artisan food might be
Maintaining biodiversity in the diet of Indonesian and reminding us about the gift given by God for humanity to tend and care for. In this continuous journey towards sustainability, we can learn from Javara that strong proposition, whether for commercial or social cause, will leads to stronger branding as well. Familiarity can be gained through proper understanding of local culture, then adapting our products accordingly to befit target demographics.
In effort to understands better about target demographics, Javara has several approaches. Research through data gathered from the internet, participating in exhibitions, and creating institutions not only as means to gather such information, but also to helps create employment and help develop local economy. Social business while differ in purpose than commercial business, the extent of its development cannot be underestimated. Still, perseverance shall be the key for Javara’s journey towards preservation of our tradition and maybe one day with growing trend for more healthy, sustainable, and ethical way of consuming, In the future Javara is there offering not only an organic produce, but also a way of life.
References
https://javara.co.id/helianti-hilman-savior-of-indonesias-local-farmers/
https://investor.id/national/jangan-jadikan-hidup-sebagai-beban
https://www.suaramerdeka.com/news/baca/208302/900-produk-javara-culture-fokus-pangan-tradisional
https://www.ukmindonesia.id/baca-artikel/121
https://www.thejakartapost.com/adv/2017/08/04/secrets-behind-ancient-sriwijaya-spice-trade.html
https://pingpoint.co.id/berita/mencicipi-bahan-bahan-alami-terbaik-di-dapur-javara/
https://klasika.kompas.id/baca/strategi-tembus-pasar-internasional-versi-pendiri-javara/
https://javara.co.id/how-it-works/
Agreements
https://money.kompas.com/read/2020/12/18/151010726/ini-keuntungan-ik-cepa-bagi-indonesia?page=all
Interview
https://www.youtube.com/watch?v=DDYwN53j_rU
International Fair
https://swa.co.id/wicf/partners/javara