Resources To Be Developed.docx

XI.

RESOURCES TO BE DEVELOPED

Resources are inputs into a firm’s production process, such as capital equipment, the skills of individual employees, patents, finances, and talented managers. Also, this potential is realized when resources and capabilities are valuable, rare, costly to imitate, and non-substitutable (Hitt, Hoskisson, & Ireland, 2016). The keys that need to be implemented in PT. Indah Kiat Pulp & Paper in order to gain competitive advantage by strengthen the resources are using technology in order to expose the environment conservation program of the company and increase global market share. In order to cut the production of cost manufacturing, plant have to be moved to a nearby supplier by combine both technology and paper to create new whole new product to retain its growth. Based on those keys, the following statement will be elaborated much further with the aim of strengthening these arguments. 

Human Resources In order to improve its efficiency and effectiveness in Human Resources, it must be improved in recruitment, selection, training, promotion and grievances handling of personnel. Also, several payments of compensation gratuity, termination of services are the few issues that have to be solve effectively to retain most employees in PT. Indah Kiat Pulp & Paper.

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Innovation Resources PT. Indah Kiat Pulp & Paper need to conduct much further in innovation program is identifying the problem that need to improve the environment friendly program, producing seed crops which are much more genetically superior than before and discovered other ideas and getting feedback from the communities based on their mission which is use cutting edge technology in the development of new products and achievement of mill efficiency.

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Culture The right method is to discuss, evaluate long-term planning and also decision-making processes by PT. Indah Kiat Pulp & Paper’s GCG principle. Likewise, it’s critical that it must find employees that fit the culture, but employees whose personal culture will fit the

organization. It must conduct evaluation the needs of core values that impact to company’s culture and finding people to fill those needs, whereas the combine legal and management frameworks in order to better conserve and preserve the core values of these resources. Culture goes both ways and it takes effort from both sides to make it work. 

Mill’s Equipment PT. Indah Kiat Pulp & Paper needs a resources development to identify development work in design a better manufacture of equipment which would be simple but easy to operate and also maintain in order to cut cost in production and boost the profit of the company.

XII.

ACTIVITY TO BE REFINED

Product Development Economic growth in 2018 as projected by the World Bank still gives us optimism. In 2018, the global economy is projected to grow about 3.1% or stronger than 201, while the Indonesian economy is estimated to grow around 5.3%. With the support of domestic economy and focus on high demand from the Asia market, in the future the company still has prospects to grow and the Company is expected to be able to increase its sales and overall financial performance to achieve the Company’s business target in the future. In 2018 the Company sets the target to increase net sales and net income about 20% from year 2017’s achievement. The Company’s performance is highly affected by the fluctuations in the price of pulp and paper in the world market which are influenced by demand and supply in regional and international levels. Today, consumption of pulp and paper in Asia region is still much lower than consumption in Europe and America. With a better economic growth and rapid population growth in the Asia region, the Company predicts that demand and price of Company’s products will continue to increase. With the globalization of world economy, the Company is required to improve the competitiveness of its products through efforts to increase efficiency and professionalism of the company. Also inevitable that the market areas of business pulp, paper, packaging and other paper products industries which managed by the Company also faces a harsh competition from local as well as overseas market. Things that play a great influence in domestic and international market are trade mark, product quality, distribution and price. Therefore, the Company has to make some efforts in all aspects to enhance the Company’s ability in order to be able to confront the competition and maintain the Company’s position as one of the largest integrated pulp and paper producer in the world. One of the efforts is to develop products that has a high added value and environmentally friendly. Marketing Strategy In addressing the challenges of 2019, The Company need to take some anticipative action by concentrating on the existing potential market through product mix strategy that has added value contributing to better margin , country mix strategy and developed new market and strengthen the basis for potential new customers, also consistently and continuously improved products quality in order to exceeding our customers’ expectations; increasing the productivity level and daily operational efficiency by implementing strong budget control, maintaining balance supply of raw materials as well as implementing the Good Corporate Governance (GCG).

Financial Aspect There is some room for improvement in INKP’s Financial aspect, which is their Average Collection Period and their Inventory Turnover.

Average Collection Period INKP vs Industry Average 2017 120 100 80 60 40 20 0 INKP

Industry Average

Average Collection Period is a ratio to measure the period of receipt of receivables (account receivables) from other entities to the company within one year. This ratio becomes one of the benchmarks for the level of performance of companies in converting their receivables into cash. Although both are parts of current assets, cash has higher liquidity status than account receivables. This is because by using cash, the company can pay interest or distribute dividends. The lower the Average Collection period, the better the performance of the company. As we can see from the graphic above, INKP has higher Average Collection Period ratio compared to the other company in the Pulp & Paper industry. INKP’s Average Collection Period is 102 days, while the industry average is 78 days, this indicates that INKP is still below average in terms of the ability to convert receivables into cash compared to other companies in the same industry in Indonesia. INKP is advised to immediately get a solution for this because it is feared that low level of Average Collection Period can disrupt the company's cash flow.

Inventory Turnover 5 4 3 2 1 0 INKP

Industry Average

As we can see from graphic above , INKP Inventory Turnover Ratio in 2017 is 2.34x, which means that every year the inventory turnover is 2.34x in one year or every 156 days. This is not good, because its below the industry average, which is 4.03x or once every 90 days. INKP must improve a little because the low inventory turnover in a company can result in high storage costs and there is a possibility that products / inventory will become obsolete.