Strategic Management Analysis: Optik Tunggal

CHAPTER 1 

INTRODUCTION

            Health is an important thing that we should pay attention to, including our eye health. Fortunately, we have Optik Tunggal to help us nurture and keep our eye health. Optik Tunggal understands that needs and provide a great service in providing eye health care. The business has been providing their service since 1929 named after their first founder, C. Fielen OD. Through time, they re-brand their name and business into Optik Tunggal in 1956. Existing for more than 90 years and passed on to 2 generations, Optik Tunggal has become one of the long lasting companies serving Indonesia’s market.

The business started more than 9 decades ago as a store in Pasar Baru, Central Jakarta. Having good intentions, Optik Tunggal envisioned the company to be one step ahead from the other optics in Indonesia. Accompanied by the motto “Best Service, Best Quality, Best Choice”, Optik Tunggal missioned the company to provide only the best service from all the services provided by the company, best quality output for their service and products and best choice for their customer more than the other optics in Indonesia as the company has envision.

Willing to provide best services, the company wanted to ensure to prioritize their service according to the customer’s need. In providing that, the company make sure that the customer’s concerns handled by professionals that has relevant knowledge in solving the customers problems. Even though the formal education to become an optical professional is not widely known and popular, Optik Tunggal ensures that every labor they have has gone through a proper training after their formal education in eye optical schools. The training has to be done to standardize the knowledge of all the labor in every stores of Optik Tunggal including those who are not working with the machines and eye testing tools and work. In an interview, third generation CEO of Optik Tunggal, Alexander Kurniawan said that every people working in the store have to own their own proper skills that enables the labor to take the best care of their customers. A managerial skill and practical skill as a refractionist optician (RO) which enables the worker to do technical activities, as well as communication skills to handle the customer as a customer service to choose the eyeglass frame, lenses and other products pay an important role. Those skills are the key to provide best services for the customers.

Align with the first mission set by the company; Optik Tunggal weaponized the professionals with quality products and recent technology to provide the consumer with quality products as well as machineries that will make the process in doing the practical activities much more effective and accurate. In doing so, Optik Tunggal cooperated with ZEISS; a company specialized in optical lenses which can be used in eyeglasses, microscope and cameras. Popular all over the world for its quality, ZEISS put their effort in making innovation in their lenses by applying the most recent technology to develop durable, comfortable and high quality lenses that fits perfectly to answer the concern of the customers. Aside from ZEISS, Optik Tunggal has become a strong distributor from many other high-end glasses and soft lens brands worldwide.  From all that cooperation with brands which quality is verified, Optik Tunggal really put their effort to ensure they deliver only the best quality products and services without trading off the pricing.

Optik Tunggal confident that they will be able to provide the customer with the best choices due to the product varieties that they provide. Optik Tunggal confident with a lot of cooperation with these products will allow the customer to pick their own choices and to find the best fitting products for their customer depending on their needs and problems. Knowing the need of their customer, Optik Tunggal will continue finding the best quality products, developing their tools and continue providing training in order for the customer to be satisfied with the services and get the most suitable product in Optik Tunggal store.

Indonesia has been served by this company for a long time. In the older times, Optik Tunggal sold their products to important people of Indonesia and now they try to serve wider segments. In 2018 with the leadership of the third generation CEO, Optik Tunggal established the children specialized optic store serving specifically for children whose age is between 2 months and 14 years old. The usual Optik Tunggal store serves people whose economic levels are low to medium. However, monitoring the growth of the income per capita of Indonesia’s population, Optik Tunggal will happily serve more segments from more economic levels. Moreover, their biggest segment is a number of customers who has been their loyal customer from time to time.

Every business has its competitor and it makes the market dynamic, so is the optic industry. Very similar to Optik Tunggal, Optik Seis also start the business around the same time and Optik Melawai opens so much later than the other 2 companies. These companies are operating in the same industry. However, their segments are slightly different where Optik Tunggal widens their market age range specializing in children’s eyewear. Optik Melawai focusing on providing comforts for their customer and create their own retail distribution channel for their lens product. Optik Seis provide differentiation by creating sunglasses products. Through a thorough analysis in chapter 2, competitor analysis will be explained better.

Optik Tunggal realize that they are not the leader in this industry, but that does not stop them from being stable and deliver the best for their loyal customer. Optik Tunggal would also want to form the knowledge of the society about the importance of eye health and being a trusty partner for it.  In the long run, Optik Tunggal would like to make sure that every store generates profit and become profit center. In order to do that, being selective and being analytical with the potential market is important as well as doing continuous chain of training, developing, making relationships with the suppliers and controlling the operation in order to fulfill the strategy as well as the vision and mission of the company.

 CHAPTER 2

ANALYSIS AND DISCUSSION

External Analysis

• Sociocultural

Serving Indonesian market for many years, Alexander Kurniawan as the CEO of Optik Tunggal has come to peace that Indonesia market has not been more knowledgeable about eye health and its importance.  Knowing that, Optik Tunggal tries their best in educating the citizens about the rumors about eye health and tries to give valid research and information in some interview. For example the rumors about ION eyeglasses that will “cure” any eye condition which is a myth and untrue due to invalid research result.  This proves that Optik Tunggal tries to give the best service for the community, not only in a sense of their product but also an indirect education regarding eye health by educating the community. Optik Tunggal realizes that when the people change in a community in a sense of education, economical level, and others, the business would also change to adapt, and Optik Tunggal is ready to adapt in a society who understands the importance of eye health.

Wearing glasses no longer only for its functionality but also for fashion purposes which is why the optical industry needs to diversify their products not only the functionality side but also the motives, colors and also shapes of the glasses and soft lenses. Optik Tunggal analyzes the environment and provides the variation for the people to fulfill the needs, the practicality and the fashion sense by cooperating and being a distributor to many different suppliers to provide many possible products to be delivered to their customers.

• Political/legal

Optik Tunggal is one of those companies which support the movement of Indonesia’s legal activities such as tax amnesties. Due to the active participation, Optik Tunggal’s reputations over the years are as clean as a whistle. This company has trustworthy reputation to the public and to the government. Optik Tunggal understands that being obedient to the government will secure their company standing and willingly participate and being active in finding the government interest in developing the economic condition of Indonesia.

• Economic

For Indonesian market however, quality of products are not the customer priority as how it is very important for Optik Tunggal. The low price and discounts are much more preferable than the glasses that have proper quality. Fortunately, Optik Tunggal creates relationship on the side with numerous of companies in financial industry to support the transaction processes for the customers. Some banks provide cashbacks, discounts, instalments, and privileges for the customer who wants to purchase Optik Tunggal products with terms and conditions as well as a given period of time. Not only banks, some insurance companies like BPJS and other personal insurances given by companies for their workers also can be used to buy the products. Economically, it makes the purchasing power of the consumer increases and allows them to be able to enjoy high quality level products without having Optik Tungal sacrifice their pricing. With that help from those parties, the customers are encouraged to make their purchases in Optik Tunggal.

• Demographic

According to statistica.com, approximately 26% of Indonesia’s population was children which hold around 71.110.000 Million people in Indonesia. Optik Tunggal sees that opportunity and seized it. That analysis creates a change in the managerial of Optik Tunggal is the opening of the children specialized store in 2018. Alexander Kurniawan stated that there is no other optic that provide services conditioned for children, and it is important to deliver best products for children as they are the generation that will lead in the future.

Aside from the Next Generation children optic, Indonesia’s demographic allow Optik Tunggal to deliver products that are available for both male, female, as well as a unisex glasses for any age and suitable for many different possible face shapes and fit for many types of lenses.

The population count on cities Indonesia and its citizen’s purchasing power also influence the opening of stores and justify the strategy of every store, depending on the condition of their surrounding and environment.  The data above validates the amount of stores they have in more populated areas rather than cities which ranked lower.

• Technological

Technology for this industry is taken a big role to improve and to take the industry to a better level. Over the years, the industry is getting more advanced. The development usually placed in getting better materials for a better quality, durable and UV screen protector. The technology is used not only as a tool to check the eye conditions in stores but also to create lenses, frame for the glasses, soft lenses, and other possible products that will be discovered in order to support the eye condition of the customer in the supplier end.

It is not easy to obtain a high quality technology that supports the mission of the company. Not only due to the price of the machines itself but also the materials, shipping, and many others. Optik Tunggal is the only company in optical industry in Indonesia that has the cooperation with ZEISS, a company that world widely known for its specialization creating the best quality lenses. This cooperation is not something that is easy to imitate due to the strong relationship that Optik Tunggal and ZEISS creates from years back. There are also other suppliers in the industry that took technological advancement as a very important aspect in developing their products that they supplied to Optik Tunggal.

The Five Forces of Competition Model

1. Threat of new entrants

Limited by the lack of labor and the limited partners to push the growth to deliver more innovative products, this industry is hard to accept new entrants. Even though new entrants that try to imitate the store by making the store seems to be an optic but turns out to be just a normal eye glass store not a proper optic tools, with proper technology and with the assistance of professional optician to make accurate diagnosis for the eye exams.

Aside from that reason, having dependable suppliers and connection over the years, the existence of legendary companies really limit the entrance of newcomers who wanted to exist in the industry. Economically, the price of making an optic store is high in amount that it will require the owner to spend a lot of funding for supplier costs, rent expenses, machinery expenses, buying products (if the store turns out to be a distributor), making the supplier connection and most importantly its labor cost which include quality training and other unseen or unexpected expenses.

2. Bargaining power of suppliers

Supplier bargaining power refers to the pressure suppliers can create to influence the business by factors that they can put their hand into. Some of the factors would be regarding the price, product quality, amount of output that they can supply to their distributor and many others. The power would be considered big when the supplier’s actions hold big proportion in limiting the possibility the company to generate more profit.

Suppliers hold small bargaining power to Optik Tunggal due the amount of suppliers that available in the market from those who hold no branding until those brands which is popular from designer brands such as Burberry Eyewear, Ray Ban, Flair to sport brands such as New Balance and any other to provide variety of style. There is a lot of supplier that Optik Tunggal can pick from because many of these suppliers has similar standard that internationally validated so one supplier will not affects the business’s ability to provide products and to gain more profit for the company.

3. Bargaining power of buyer

Buyer bargaining power refers to the pressure consumer can create demand and request the business to provide them better quality product, better customer service, a more affordable prices and more perks that allow the consumer to purchase their products which influence the possibility for the business to make more profit.

Buyer has high bargaining power because there are other optics centers other than Optik Tunggal such as Optik Seis and Optik Melawai because they are also holds a big role in the industry. Consumer also has the right to pick their own advantages depending on their capabilities and conditions as every company offers different set of advantages. Due to this request from the customer, Optik Tunggal tries their best in keep providing and generates more innovative products, creates more variety products and many others. Knowing that, Optik Tunggal provides their product a lifetime guarantee which will compensate the pricing for the quality products that Optik Tunggal offers.

4. Threat of substitute products

The threat of substitutes is refer to when the other competitors or other company outside the industry can replace the company’s product. This threat can cause the consumer to switch to the other competitors who can provide better products or who has the same product as the company.

Optik Tunggal’s assets are their relationship with their partners, their suppliers, their machineries, their labor and ability to create standardized labor, customer service, provide ways to make their product purchasable for their customers which are untradeable and reputation proof. Seen from the complexity to be able to earn all that, the threat of substitute products are low with a warning of constant development and continuous monitoring of the company.

5. Rivalry among competing firms

Competitive rivalry is a natural force when more than 1 company exists in an industry which leads to competitive moves, the need to be constantly improving, doing continuous competitor monitoring and doing actions to gain competitive advantage as well as ensuring the business’ position in the market.

Even though there are some other competitors who exist in the industry on the same industry as Optik Tunggal, they also have different ways in captivating their customers. Alexander Kurniawan mentioned eyewear stores that claim to be an optic also should be aware of. In this industry the rivalry among the companies are high. Optik Tunggal provides children specialized stores and a lifetime guarantee of its product, Optik Seis provide labor force that being educated by licensed optometry doctors from abroad and Optik Melawai served the medium and above economic level for Indonesian market.

Internal Analysis

 Resources

            Optik Tunggal that has existed for 9 decades has values, histories and reputation that let them become strong in their intangible resources. Their histories cannot be bought by money and hard to imitate. A number of stores, machineries and quality labor as well as their supporting parties are a tangible asset that they have and keep the stores running and generate profit. Tangible resources from Optik Tunggal also included their ZEISS license which gives the company more access to gain position in the market.

Capabilities

With all the tangible and intangible assets, Optik Tunggal is able to deliver great quality product that can serve low to middle range economic level in Indonesian market. Their labors are able to deliver constant service that satisfy their customers and their lifetime guarantee keeps their consumer coming back to the store and being a loyal consumer. They also come back for repair due to the repair guarantee that comes with the perks. Existing for a long time, there must be a number of people who loyally using the products that provided by Optik Tunggal for a long time.

Core Competencies

            Optik Tunggal has quality as their core competencies. They pay attention to not only quality products, but also quality labor, quality supplier, and quality services. The company has the ability to keep developing their products and pick only from reliable suppliers and those who can commit and has the technology to keep making innovation in their products. In every variety of product, in every sub-variety and every products targeted for any segmentation, the products holds the quality standard and keep passing the overall standard.

Discovering Core Competencies

Quality products are valuable and costly to imitate due to certain processes to be done in order to get into the point of producing great products. Optik Tunggal get through the process with their partners and suppliers in order to deliver best services, best quality and best choices for the customer as it is stated in their vision. The company has standard and making sure the processes are done continuously and get through a proper monitoring. With that, they successfully offer quality product to the targeted market.

Competitive Advantage

            Optik Tunggal successfully deliver quality product with suitable perks with the help of other parties Optik Tunggal. Optik Tunggal is licensed to ZEISS brand which has the best technology and standard in the eyewear industry. Due to this license, people who care about their eyewear’s quality and eye health would have Optik Tunggal as their choice to let the company care for their concerns. This is something that cannot be done by other optic let alone an eyewear store. Competitive advantage of Optik Tunggal lies on the product quality. Due to that, Optik Tunggal will continuously finding great suppliers and push the industry to innovate better.

Children consumer also would directly goes for optic who understand their concerns and parents would also want what is best for their children. No other competitor own a specialized store like Optik Tunggal which makes the company a better placement in the position in the market.

Strategic Competitiveness

Focusing in delivering quality products, giving premium offering and has strong brand and delivering products based on its characteristics such as shape, durability, style, designs and other features and benefits. Being in a broad market that has to rely on delivering variety products in meeting consumer demand through differentiation, differentiation strategy is suitable to be used and applied. Using this strategy, the company wishes to compete in the competitive market of optical industry.

Five Business Level Strategies

There are several types of strategies that usually applied by businesses depending on their goal and positioning in the market. One is called cost leadership strategy which focuses on providing low prices on the product and increase profit by reducing operational cost and offer lower prices compared to their competitors. The other is differentiation strategy where the goal is to be different and provide variety in their products which take importance in quality over prices. In conclusion, Optik Tunggal is applying differentiation strategy which put greater focus on meeting customer satisfaction, educating the labor and the quality of the product over its cost. Optik Tunggal tries to find other ways in helping the customer to afford the products.

The differentiation lies on the style, shape, functionality of the product and Optik Tunggal has to find suppliers to fit in to every possible preference from the customers. Even though cost leadership is not the main strategy that applied in the company, serving low to middle economic level market pushes the company to find possible ways to be affordable for the market.

Competitive Dynamics

Existing in an eyewear industry, Optik Tunggal has plenty of competitors that targeting similar market and offering similar products as the competitors. Optik Tunggal’s competitors are Optik Seis and Optik Melawai. Even when they are being in the same industry, they are actually serving different customer with different ways to gain market proposition. Optik Tunggal focuses in giving best quality products through technology and innovation which allow them to serve low to middle economic level market with great quality products. Optik Seis strives to give the best for their customer by having professional specialist in eye area and educating their labor under a licensed professional from England and America. Optik Melawai serves middle to upper-middle economic level market. Their ways in doing their business creates dynamics in how they serve the market. The strategy influenced the focus, goal and steps that the company takes in gaining advantage.

Optik Tunggal opens The Next Generation optics specialized for children to gain market for a new segment which is children aged 2 months – 14 years old. This move will take the market of other competitors which normally doesn’t have differentiation in that segment. Ensuring constant innovation, Optik Tunggal has become the licensee of ZEISS and that has given Optik Tunggal advantage in having relationship with the world’s best lens producer.

Type of Diversification

Diversification is a business strategy allowing a company to enter additional lines of business that are different from their current products, services, and markets. This action is done in order to serve more market, obtain bigger market share, or gain competitive advantage towards the customer or the suppliers compared to the other companies which roles as the competitor. Diversification happens in order to acquire new product to a new market which creates different types of diversification. The types of diversifications are varies depends on the condition of the company itself. The types of the diversification strategies are horizontal, vertical, and a few others.

Optik Tunggal is a type of company that apply horizontal diversification which targeting to expand market share and to introduce new brand product in either new market segment or the existing market. Horizontal diversification that applied is the concentric diversification which enables Optik Tunggal to give variety to their products and sells products which are still in optical sector. Optik Tunggal focuses only on producing optical eyeglasses and soft lenses and most of their revenue comes from the eyeglasses that they sold. That means that they are very limited in diversification. They are more focused into providing large variety of products in a line, improving the quality of their glasses, making more corporations with the eyeglass and soft lenses suppliers. This makes them a single business with a low level of diversification.

In order to gain the level of diversification, Optik Tunggal might have to gain more business for the companies that support the main company. They might want to be involved to produce their own glasses and soft lenses in order to strengthen their supply chain. They also might want to start producing optical tools and producing any other eye testing machines as their way to diversify their business. To become a high level of diversification, Optik Tunggal might want to make a business completely detached from the eye optic sector.

CHAPTER 3

SUMMARY AND SUGGESTION

Align with the first mission set by the company; Optik Tunggal weaponized the professionals with quality products and recent technology to provide the consumer with quality products as well as machineries that will make the process in doing the practical activities much more effective and accurate. Optik Tunggal confident with a lot of cooperation with these products will allow the customer to pick their own choices and to find the best fitting products for their customer depending on their needs and problems. Knowing the need of their customer, Optik Tunggal will continue finding the best quality products, developing their tools and continue providing training in order for the customer to be satisfied with the services and get the most suitable product in Optik Tunggal store. In the older times, Optik Tunggal sold their products to important people of Indonesia and now they try to serve wider segments. Very similar to Optik Tunggal, Optik Seis also start the business around the same time and Optik Melawai opens so much later than the other 2 companies.

Optik Tunggal realizes that when the people change in a community in a sense of education, economical level, and others, the business would also change to adapt, and Optik Tunggal is ready to adapt in a society who understands the importance of eye health.

Economic For Indonesian market however, qualities of products are not the customer priority as how it is very important for Optik Tunggal. There is a lot of supplier that Optik Tunggal can pick from because many of these suppliers has similar standard that internationally validated so one supplier will not affects the business’s ability to provide products and to gain more profit for the company.

Buyer has high bargaining power because there are other optics centers other than Optik Tunggal such as Optik Seis and Optik Melawai because they are also holds a big role in the industry. Optik Tunggal’s assets are their relationship with their partners, their suppliers, their machineries, their labor and ability to create standardized labor, customer service, provide ways to make their product purchasable for their customers which are untradeable and reputation proof. Optik Tunggal provides children specialized stores and a lifetime guarantee of its product, Optik Seis provide labor force that being educated by licensed optometry doctors from abroad and Optik Melawai served the medium and above economic level for Indonesian market.

With all the tangible and intangible assets, Optik Tunggal is able to deliver great quality product that can serve low to middle range economic level in Indonesian market. Existing for a long time, there must be a number of people who loyally using the products that provided by Optik Tunggal for a long time. Competitive Advantage Optik Tunggal successfully deliver quality product with suitable perks with the help of other parties Optik Tunggal. Optik Tunggal tries to find other ways in helping the customer to afford the products. The differentiation lies on the style, shape, functionality of the product and Optik Tunggal has to find suppliers to fit in to every possible preference from the customers. Dynamics Existing in an eyewear industry, Optik Tunggal has plenty of competitors that targeting similar market and offering similar products as the competitors.

Optik Tunggal focuses in giving best quality products through technology and innovation which allow them to serve low to middle economic level market with great quality products. Ensuring constant innovation, Optik Tunggal has become the licensee of ZEISS and that has given Optik Tunggal advantage in having relationship with the world’s best lens producer. Optik Tunggal is a type of company that apply horizontal diversification which targeting to expand market share and to introduce new brand product in either new market segment or the existing market.

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