Strategic Management Analysis: PT. Kenari Djaja

Chapter I

Introduction

1. Company Introduction
2. Kenari Djaja Prima is Indonesian company that famous for retailing imported building materials such as: Door Locks and window locks, as well as Italian hand-made handles, sound movable partition, frameless glass movable partition. It all started from a humble beginning from a small kiosk in one of the corners of Pasar Kenari, Salemba, Jakarta on 27 February 1965. The Kiosk was then called KENARI DJAJA, a name taken from the location where the kiosk was established, so that the kiosk will be easily remembered by its customers. This small kiosk started off by selling construction materials such as sand, bricks, and other building materials. The situation started to turn when a salesperson from an import trader offered KENARI DJAJA to sell their imported locks. Initially this offer was refused due to the high price tag on the goods. However, this offer was then accepted later after the import firm suggested a consumption system for their goods.

Fast forwards to the present time. Kenari Djaja has been built and developed based on the objective to become the most acclaimed company in the field of architectural hardware in Indonesia. And only provide high quality products and the best service available. With a store across all of Indonesia, with almost 5 decades experience on the market. Kenari Djaja has become leading retailing company in selling high quality building material for Indonesia customers.

1.1       Company Vision

KENARI DJAJA has been built and developed based on the objective to become the most acclaimed company in the field of architectural hardware in Indonesia. And only provide high quality products and the best service from qualified human resources, as well as creating mutually beneficial cooperation with all the related parties in the business and all that our commitment to the best.

 1.2       Company Mission

To actively participate in building the country and increasing people welfare by providing various architectural hardware products with full commitment to the product quality and aesthetics and continuing to serve the costumers by giving the best services through well trained and professional human resources in order for the company to generate high performance and valuable benefits for the stakeholders (customers, employees, communities, suppliers, government, and shareholders).

      Kenari Djaja Markets & Consumer Segments

1. Kenari Djaja Prima mainly focused on selling high quality doorknobs and window knobs in Indonesia. Their product consisting such as: Door Locks and window locks, as well as Italian hand-made handles, sound movable partition, frameless glass movable partition. Their consumer segments mainly targeted middle to high income segments. Their products offer a highly quality and innovative building door locks and partitions. Also, many private housing developers outsourcing their door locks to Kenari Djaja Prima because of their quality. Also, Kenari Djaja also targeted contractors to always recommend products of PT. Kenari Djaja Prima to the consumer. They also focused to provide services to big architectural project such as: housing, hotels, offices, ATMs, as well other buildings. Several large contractors, companies leading developer and various offices from private sector to government buildings to become loyal customers of the brand.

• Kenari Djaja Business Competitors

1. Kenari Djaja have few business competitors. Because of the nature of the markets which very oligopolistic compared to other industry. There are few competitors in the market and the barrier of entry in this industry are very high which makes new company reluctant to enter this market. Because, in this market the only thing that differentiate between brands is the technology that being implemented on their products or the price that the company can offer to the market. Therefore, to enter this market it needs a lot of resources and money in order to stay competitive in this market. However, there are 3 main competitors in Door Locks & Window Locks market in Indonesia which are:

• Fajar Lestari which is official distributor of Dekkson door locks.
• Mega Perkakas Indonesia which is official distributor of Yale, Master Lock, Ametek,
• Imported product from China that sold on Online B2B platforms such as: Alibaba.com

With these competitors above PT. Kenari Djaja roughly 40% market share in the industry which makes them one of the “big player” in the industry. Therefore, the doorlock and partitions market generally being controlled by PT. Kenari Djaja Prima as market leader in this industry.

• Kenari Djaja Business Models

Generally, PT. Kenari Djaja focusing in distributing and selling imported door locks across Indonesia. Besides that, PT. Kenari Djaja also ensure customer with great buying experience from buying to after sales process. Therefore, a relationship between customer are made between the two parties. Thus, resulting a long-lasting relationship between the buyer and PT Kenari Djaja. This customer loyalty are PT Kenari Djaja main strategy in order to stay competitive in the market. They view this as an important asset for the company in order to grow even further. Therefore, PT Kenari Djaja focuses more in generating value for their customer in order buyer could get a positive buying experience from the get-go. To ensure this PT Kenari Djaja using 2 strategies inorder to create a value for their product. The first one is diversification of their product. Below is the product that are being sold at PT. Kenari Djaja:

Besides the product diversification, PT Kenari Djaja also focuses in making the customer buying experience enjoyable they also focusing generating value in their buying process which are:

• Installation services
• Repair services,
• Consulting services
• 24 Hour Emergency call services

In addition, PT Kenari Djaja Prima also provide convenience in the system payment of its consumers. With holding several promo events, in which will increasingly attract consumers to make purchases on products that are offered by PT. Kenari Djaja Prima.This is a form of commitment of the company are made in order to satisfy its customers, so that the company becomes market leaders, especially in the field sales of quality imported key products from Italy, America and Germany.

Chapter II

Company Analysis

• Five Business Level Strategies Analysis

Since, PT. Kenari Djaja Prima sells imported door locks and windows. Their main business level strategies are focused towards Focused Differentiation. Their analysis is down below:

• Kenari Djaja only sells imported door lock and windows in which comes in higher price but with added values.

• Their product target very specific / niche markets. Which is middle to upper class customer who wants a good quality for their doorlocks and windows.

• Most of their customer are a loyal customer who are pleased with Kenari Djaja product and have been a long-term customer for them

• Their product is specific. Which is, a high-quality door locks with added technological value such as door lock that can be open with fingerprints.

• Their retail store is mainly located in malls in which prospective customer could see and feel the product. In which makes the buying experience more enjoyable.

• Besides a good store, PT. Kenari Djaja also emphasize on good customer service to bolster a good buying experience.

In conclusion, PT. Kenari Djaja Prima is unique company. Because it’s the only one that sells door locks and windows in Focused Differentiation strategy. Therefore, makes them unique than other rivals. With focusing on niche market, they can give more value to the customer and makes their overall shopping experience much more meaningful. With focus differentiation strategy this meant that they act as the “market leader” on the industry. Because with this their product is unique to each own therefore, makes them unique in the market. With this innovation in door lock technology it increases the value of the product.

2.2       Competitive Dynamics

             Types of Industry/Market

• Kenari Djaja Prima, mainly focused on selling high quality door knobs and window knobs in Indonesia. Their product consisting such as: Door Locks and window locks, as well as Italian hand-made handles, sound movable partition, frameless glass movable partition.

1. Kenari Djaja Prima Competitor

• There are 2 main competitors in Door Locks & Window Locks market in Indonesia which are:
  • Fajar Lestari which is official distributor of Dekkson door locks.
  • Mega Perkakas Indonesia which is official distributor of Yale, Master Lock, Ametek,
• Market Commonality
  • The Market Commonality is moderate, but this is also accompanied by the high barrier of market entry into the industry. This is because of the similarity in all of the door locks and window lock products. The only that differentiate them is the quality and technology between the products.
• Resource Similarity
  • The Resource similarity is pretty much the same between the competitors. The only thing than the differentiate them is the types of aluminium and steel use on the products.

Competitive Behaviour

• The competitive behavior of PT Kenari Djaja Prima, as the market leader in industy is by selling a high quality products to customer as well as giving a good service quality for it’s consumers.

Competitve Rivalry

• The Competitive Rivalry in this industry can be breakdown in such:
  • First Mover Benefits:

1. Kenari Djaja are the market leader in this market therefore, they always bring new innovative doorlock products on the market. By doing this, it consolidated Kenari Djaja position on the industry. Which makes them first mover in industry.

• Organizational Size:

The size of organization of PT. Kenari Djaja Prima is by far the biggest in industry. With distibutors accros Indonesia, it makes their products much more accessible and well know accros Indonesia.

• Quality:

1. Kenari Djaja is famous for it’s product quality and customer service. Their products has been built and developed based on the objective to become the most acclaimed company in the field of architectural hardware in Indonesia. And only provide high quality products and the best service from qualified human resources.

Likelihood of Response

• Type of Competitive action:
  • To gain competitive advantage PT. Kenari Djaja always introducing new doorlocks to the market. Their products is always innovative with digital safety and high quality. Also, their distribute their product to the third party company such as mitra10 and depo bangunan.
• Actor Reputation
  • PT Kenari Djaja are the most experienced company on the market. With almost 5 decades experience on the market. Kenari Djaja has become leading retailing company In selling high quality building material for Indonesia customers.
• Market Dependence
  • The market is very dependence with PT Kenari Djaja. Because, of the size and availability of the product makes them very sought-after product in the market. With the accessibility of the product makes the market very dependent to them.

Competitive Dynamics

• The Cycle Markets in this industry are very slow. Because, in this past 10 years PT. Kenari Djaja Prima have been the industry leader in this market and as the oldest company in the market it helps them to grow even bigger. Also, the product in this market are very hard to imitate because of the technology used in the products.

2.3       Type of Diversification

1. Analysis

*Information are compiled & gathered from the official Kenari Djaja Company Profile and Website

1. Kenari Djaja Prima business model comprises of two main company segments which are:

• Door & Windows Products: This Segements is PT. Kenari Djaja focus with products such as: Belleza, Solid, Kend and Grandino. This segement mainly focus on providing customer door and window products that can be applicable in most Indonesian homes. This Segments takes 95% of Kenari Djaja net sales.
• Wall Partitions: This segment mainly provides customer with wall partitions for their homes or big office spaces. This wall partitions are consists of 3 products which is: Glass Partition, Sound Deafening Partition & Regular Wall Partition. This Segements only takes 5% of its net sales.

Based on the analysis above, PT Kenari Djaja Prima is using Low Levels of Diversification. Because, with 95% of it’s net sales comes from only one segements. Which is, Door & Window products. With this it makes PT Kenari Djaja Prima becomes Single Type Business with only focus in one products/segments. In this case, the main notable product that Kenari Djaja offers are its Door and Window such as Belleza, Kend, Grandino and Solid. This line of products mainly focused on door handle and its locksets. However, PT Kenari Djaja still have one small product line that differs from its door and window products. Which wall partition segments, this makes up only 5% of Kenari Djaja net sales. Moreover, the reason why PT Kenari Djaja have low diversification strategy is they have big market share in the segments and their business models makes loyal customer buying their product from time to time. PT Kenari Djaja Prima estimated that they already control 40% market share within the industry. Also, by looking at this we could say that the segment market is oligopolistic because there is few competitors on the markets and the barrier of entry is very hard for another company to entermakes PT Kenari Djaja Prima favourable in the door and window products segment. However, to conclude all this PT Kenari Djaja Should diversify in order to tackle uncertainty within the business environment. Therefore, they should diversify their products.

2.4       Internal Analysis

Value Chain Analysis:

In this competency’s aspect PT. Kenari Djaja have a good human resource that can cater it’s customer needs. With good human resource they could give added value in their shopping experiences also they also ensure their product have a warranty system that way the customer could exchange the product if there is a defect in the product that they bought. Also, they have very good customer service system in which make the warranty system claim more accessible for the customer. Which on its own are adding value in customer buying experience. The way they added the value by giving customer a good after sales services.  PT. Kenari Djaja offers customer a money back guarantee for its products if there are any defects on their product. Also, they offer, a service installation for its customer for customer to get the best quality from their product. Moreover, they offer a repair service if there is any problem from their products. This thing creates a great after sales buying experience in which creates a consumer trust for their products. Also, their sales division are trained to giving customers a great buying experience. The marketers are being viewed as an “consultant” rather than salesperson. This resulting in generating more positive buying experience for the consumer because they are being treated as an important asset by the company.

Competitive Advantage:

The competitive advantage of Kenari Djaja is they by far the oldest company in retailing imported building materials. With almost 5 decades of experience this helps Kenari Djaja having in advantage in having a good knowledge on the market and have many of loyal customer. Also, they already established to be a brand that synonymous with the specific niche that they are targeted for. Therefore, it would be an advantage for them. Also, with their expertise they really know in detail the Indonesia market. Therefore, they really can adapt with the consumer behavior in Indonesia.

Sustainable Advantage:

In this category the product that they are selling are very hard to imitate because they sell a high-quality door lock from abroad with also many innovations such as digital door lock, etc. This meant that the product that they are sell are having more quality than the local counterparts. Also, it makes the product more valuable in general because the product in general more innovative and better build. So, customer buying the product would have a sense of pride in buying the products.

Core Competencies:

The core competencies of Kenari Djaja it’s their ability to cater different consumer taste with their product line. With many diverse product line they able to cater different needs and taste for their customers. Also, with an expertise in the industry for almost 5 decades it helps them to know in detail Indonesian consumer behavior. Therefore, making them very competitive in the regional market. Because, they know what the Indonesian customer wants and needs. With this they can create a product that really caters to Indonesia markets in general.

2.5       The Resource Based Model Analysis

            Resource:

The resource in order to succeed in this market are company must have a good line of product in terms of quality and technology. Also, a good manpower its also affected the result on how the company could perform in the market. Therefore, having a good motivated employee would benefit the company on the long run. Because, in this industry employee acts as an important player. The performance of the employee could result a greater buying experience for the customers. Also having a good supplier for the door locks and partition could give the company an advantage because in this market usually the company act as an official distributor for the Indonesia market. Therefore, having a good cooperation with a well-known brand could ensure the position in the market. Owing to the fact that becoming the distributor of the well-known product ensures the quality of the product that we offers to the market. Therefore, signify the importance of finding the good brand to distribute for Indonesian market.

Capability:

            The capability for these industries is in its experience in the Indonesia markets. With an expertise of almost five decades. PT Kenari Djaja Prima needs to know the trends and demands of Indonesia customer in detail. With this expertise, also makes Kenari Djaja Prima become a well-known product throughout Indonesia. Therefore, making them the “market leader” in this industry. Another core capability of them is to give customer an innovative and well build product. By striving to give its customer a great buying experience from the buying process to its aftersales it could cater every customer taste and needs from digital door locks to luxurious door locks. Besides that, PT Kenari Djaja also offers good aftersales services to its customer in order to gain customer loyalty. Thus, could keeping them be the market leader in the industry.

Competitive Advantage:

            In Business, the competitive advantage is the construct that allow companies to outperform its rivals. The competitive advantage may include the access of the raw materials, high entry barriers and access of new technology or production systems. In PT Kenari Djaja Prima case, their advantage is their ability to cater every Indonesian customer need and wants. They have been striving to provide a wide range of door locks and wall partition to Indonesian customer for over five decades. They have also provided them with a variety of products which are very popular among Indonesians. The company has been able to achieve this by striving to make a good buying experience for their it services. The company is known for its quality and excellent product that makes them very long lasting and reliable. Also, with an expertise for almost 5 decades it makes them one of the biggest door locks distributor in Indonesia. They are famous for being the distributor of well-known doorlock brands such as CISA and Fusital which are originated from Italy. This resulted the company having a strong brand name in the market. This is because they are known for their high quality and innovative products. With this combine it creates a competitive advantage for the company in order to stay competitive in the Indonesia market and become the market leader in the region.

An Attractive Industry

            In this industry the opportunities are in nature the market are very much oligopolistic. This market is dominated by a few companies that have been established and controlled by one or more of these firms thus resulting a high barrier of entry for a new company to enter. The main reason why there is such a high barrier of entry for new companies to enter into the market is very difficul the competition is so fierce that it cannot be overcome by any other means than through innovation or quality. Therefore, a new company must invest a big ammount of money in order to stay competitive to its rivals. This makes PT Kenari Djaja Prima at favourable position. Because the company already well established in Indonesia markets and there already many loyal customer that choose them over its rival. Thus, limiting the rival ability to enter the market because they are already established in Indonesia market. In addition, the company in general already controlled 40% of the market share within this industry and has been able to maintain their position as the leading distributors for its customer. This due in fad because the nature of the market remain oligopolstic in nature which makks keeps them the “status quo” in the market.

Strategy Formulation & Implementation

            After looking the capability and the competitive advantage we can conclude that there is several strategic management strategy that can be implemented for PT Kenari Djaja Prima in order to grow their company and retain the market leader position in industry:

• Focusing in making with great quality and innovation in order to create product value for the customer to buy the product
• Striving to giving a good aftersales program in order customer feels valued in their buying experience
• Diversify their product line in order to be agile in the market specially to giving customer choicer at more different price range in order to cater all the markets within Indonesia

2.6       Five Forces Analysis Model

            Threats of New Entrants

The threats of the new entrants in this market are very limited. It is because the nature of the door lock market in general. This is because although there many substitute products but to ach own its product differs from each other. Thus, resulting the company have to innovate in order to stay competitive in the market. This makes companies must invest a lot of money on product development which limit the opportunity for new company to gain market share. This makes in nature a very oligopolistic market where there are several established companies that control a big portion of the market share. This put PT Kenari Djaja Prima at favourable position because they are well established company that control 40% of the market share.

Bargaining Power of Suppliers

The bargaining power of suppliers in this market are moderately high. Because each distributor competes to privately distribute these imported brands in order to attract consumers from their other competitors. So, the supplier or the imported brand have very high position in regarding to choose their partner for distributing their product in Indonesia. Which makes the company fights over each other to give a good offer for the suppliers in order to partner up with them. Having a good supplier meant that there is an assurance in quality in the products they distribute and having a famous brand will also help the company to sell the products much easier. Because it met with the customer demands. In this case, PT Kenari Djaja Prima have always been a distributor for several famous imported door locks such as CISA, Enrico Cassina, KEND, Belleza and Solid. Which these brand already famous in the Indonesia markets which makes the company in a very strong position.

 Bargaining Power of Buyers

            The bargaining power of buyers are moderately low. This is because, there are limited substitute products in the market. To its own each product are different in quality and safety features which limit the customer for certain substitute products. Therefore, customer being limited to certain product of substitution which not many in this market.

Threat of Substitute Products

            In this market the substitute product is very limited. Because, each product offers different kind of quality and safety functions between them. There is also difference in designs in which makes the product uniquely to each own needs and functions. Therefore, consumer is limited by the number of the substitute product.

Rivalry Among Competing Firms

            The rivalry between the firms are very moderate. Because, there is only several established company that control the market share between them. Which resulted a lower rivalry among them, moreover each company focus in different segmentation and market. The only thing that makes each company compete over each other is on government building contracts or third-party outsourcing services. In this case, it is not possible to compare the price of their products with each other. Because of this, they must differentiate themselves from others by offering more competitive prices. For example, if one firm has high price but low-quality service then it will be difficult for another company to offer better quality service. Therefore, the competition will increase as well. This is since there are many firms who can provide good quality service at lower prices. However, besides that, there are only main three competitor in this market. Which is PT. Fajar Lestari which is official distributor of Dekkson door locks, PT. Mega Perkakas Indonesia which is official distributor of Yale, Master Lock, Ametek. Also, Online B2B platform from china such as alibaba.com.

 Chapter III

Summary & Suggestion

3.1       Summary

After looking through the company background and the company analysis regarding its strategic management operation. We can conclude that there are several things that made PT Kenari Djaja Prima become a legendary company in Indonesia. The reason why they can maintain consistent performance throughout five decades it’s started from their internal environment. PT Kenari Djaja always emphasize in giving its customer the best service that they can give. Therefore, PT Kenari Djaja always focusing in developing their HR capabilities in order to give the customer the good service that they need. Also, PT Kenari Djaja Prima also wanted to ensure its customer that the product that they are buying are good high-quality product. Thus, they striving to give customer the best buying experience. This could be achieved by having the competitive advantage or added value from their line of products. The competitive advantage of PT Kenari Djaja Prima are their experience in the industry with thid they have a knowledgeable information about Indonesia market and it’s buyer.

Therefore, PT kenari djaja prima can provide the best service to the customers. Moreover, PT kenari djaja prima has a strong reputation for providing the best product to the market. They also have a great reputation for being reliable and trustworthy. With their customer centered serviced it helps PT Kenari Djaja ‘s company to gain more customers and increase sales. Also they also focusing to generating customer loyalty by having good aftersales service offering installation and servicing policy for their products. This will help customer to feels valued and increase the brand trust exponentially. However, the diversification of they product still limited to realted product. With 5% other product amounted from their total net sales thus making PT Kenari Djaja become inflexible if there is a market disruption in the long run therefore making them vulnerable in the future.

 3.2       Suggestion

PT Kenari Djaja Prima favourable in the door and window products segment. However, to conclude all this PT Kenari Djaja Should diversify in order to tackle uncertainty within the business environment. Therefore, they should diversify their product in order not only to reduce risk but also increase the market share and to retain as the market leader in industry. With difersying their product it also helps the company to gain competitive advantage to compete against the competitor. Moreover, the company could also looking for another foreign imported product to partner up to expand their portfolio of their product in order to gice the customer more choice. Therefore, the company could serve more customer needs and demand even better. Also, to grow the company even bigger it is better to make the company go public in the stock market. Because, untill now the company is still family owned thus making the financing the company much easier.

Finally, the company can use its own resources to achieve a goal that they have always been striving for in their vision and mission statement. By investing more in internal capabilities, it could increase the company advantage and the uniqueness of the company itself. In addition, the company should invest in new technology in door lock products. With this it can help the company differentiate themselves by offering a unique product that will be able to increase the value of the product itself. Lastly, the company should invest in expanding into the new regional market outside Indonesia and focused more in South East Asia region. These are all important steps to help PT Kenari Djaja Prima to grow even bigger in the future. Because, the opportunity in the South East Asian region is very high with the free trade agreement in the region therefore, the company could expand their business and become a major palyer in South East Asian region.

 References:

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