Risk satisfied with the current president of
Risk Assessment Type of Risk Score Ways to offset or deal with risk Political · The next election is in 2019 · Current leader or President of Indonesia is Joko Widodo · Joko Widodo is a part of the Indonesian Democratic Party of Struggle · High level of corruption in judiciary · Recurring outbreaks of public violence · Demands for greater autonomy or independence · Residents are satisfied with the current president of Indonesia · Presence of a local terrorist organization, Jemaah Ismaliyah (JI) · Weak level of rules of law · Criminal and administrative laws are not enforced in certain parts of the country · Possibility of the recurring event of ouster of Suharto in 1998, violence amongst cities or the Chinese Indonesian population due to the arousing sentiments of local resident. This violence has caused a number of casualties, which tells us it was a serious matter. · Indonesia ranks 88 out of 175 in the Annual Corruption Perceptions Index which indicates the level of political corruption in the country. (Indonesia has been showing a steady improvement since 2004) · Nepotism – Favouring a family member over others, perhaps in granting someone a political position. 6.5/10 · Solid preparation of what you might have to face and how to talk or deal with major political figures.
· Possibly having to give a “bribe amount” to get something done in the country · Information collection – thoroughly know what the current events in the country are and how to deal with controversial situations. · Prevent yourself from any controversies or saying your opinion out loud · Hiring a translator or driver that can help your understand the language, culture and values of Indonesia as well as wan you of any dangerous acts about to take place. Financial · Indonesia is a developing country therefore, lack of infrastructure quality and quantity exists · Various types of developments may endanger or threaten the economic stability of Indonesia leading to damage to your investment or business in the country. · High inflation, a heavily depreciating Indonesian rupiah exchange rate, rising poverty, slowing GDP growth, rising unemployment rates and fiscal instability due to a widening current account deficit or weak tax revenue.1 · Limited Canadian operating banks in Indonesia include TD Bank, Scotiabank and RBC Bank. · Poor economic status · Lack of money for investment in areas such as infrastructure development · Multiple ways to create fraud in business since it is a developing country and laws aren’t enforced or strict towards theft or fraud cases 7/10 · Awareness of economic development in infrastructure · Canadian businesses wanting to expand into Indonesia or possible start some kind of business here should study the macroeconomic indicators of Indonesia which will provide them with full and important information about Indonesia’s economic state and its stability. · No legal protection on intellectual property so in order to do business in Indonesia one must be cautious of the surroundings and alertly be aware of any suspicions of theft.
· It’s recommended that the owner get his/her business insured in case of any theft or fraud. Social/Cultural · Language difference (Bahasa Indonesian, Javanese, Dutch and Sundanese) · It is recommended to understand the basic greetings of the Bahasa language · Position in business and hierarchy is very much valued · Difference of etiquettes · People of Indonesia are usually very open with sharing personal information or information about their family · Religion and cultural differences (Largely Muslim population) · Enforced strict Islamic values and cultural aspects of life including the way people dress especially women · Many controversies regarding the Muslim religion and their cultural values · Violence against Chinese Indonesian during the resignation of Suharto was caused due to people’s perception of the economic situation of Indonesia. Chinese Indonesians are a large part of business in Indonesia but considered a minority in population.
During this time there already political and economic disturbance which made it easier for them to instigate the Chinese Indonesian population. · Regional violence that occurred between major cities such as Kalimantan, Sulawesi and Moluccas previously may occur again as it was a result of triggered religious and ethnic sentiments. 5/10 · Canadian businesses should be aware of the Indonesian violence that take place every now and ten and to stay away from them. This can be done by not putting out an opinion towards any religious or ethnic background of the Indonesian culture or even any political figure unless they know the political figure very well and have comebacks for their argument.
· Be prepared when planning to do business in Indonesia about their basic business etiquettes · Do not reject a gift if offered as it looks rude and will create a bad impression · Attempt to be open-minded in conversation with Indonesian people and talk in a comfortable and calm manner · Giving a business card with their language printed on one side is recommended · Giving a gift in the initial meeting is recommended and tends to create a good impression · Its best for anyone in Indonesia there for business reasons to stay away from any controversies or any politically related talk or topic as it may cause provoked sentiments leading to violence. · Hiring a translator or driver that provides you with all information of the events occurring in Indonesia and their severity as well as help you understand the Indonesian cultures and values. · When greeting a group of people start with the eldest or the most senior person present Technical · Lack of infrastructure quality and quantity · Poor and inconvenient layout of buildings, roads and health centres · Indonesia ranks 62 of 140 economies in terms of infrastructure development. · Advanced technology and innovation is required · Indonesia has not been able to keep up with the infrastructural developments since the economic drop. · The weak infrastructure implies that the economy is run in an inefficient manner due to logistic costs being high, businesses lack competitiveness since the cost of doing the business is high · There is a high level of social injustice (families are unable to reach the hospital or children are not able to go to school). · Manufacturing facilities are very basic and unprofessional and may breakdown at any time, no guarantee. · Machines are not of best quality and therefore require more maintenance and energy to be fixed in case of a sudden break down 6.5/10 · Awareness of economic development in infrastructure and possible opportunities of sending Canadian Infrastructure expertise to take action against this and develop a strong infrastructure as it will benefit both the Indonesians and Canadian businesses causing a win-win situation in which both sides are satisfied.
· Invest in the infrastructure sector of Indonesia, for example the mining sector. · Canadian companies need to be aware of such manufacturing issues so that they can be resolved without delay or problems · Hire someone to service these facilities, do repairs and regularly checkup on them to see if they are functioning correctly and assume responsibility · Purchase personal or life insurance in case of any tragedy that might occur unexpectedly such as an accident · Purchase insurance to protect property and manufacturing facilities Natural · Indonesia is located on the Pacific ring of Fire and most of its geographical region consists of water which makes it more vulnerable to natural disasters occurring. · The effects of natural disasters such as earthquakes, tsunamis, volcano eruptions and floods are worsened due to the fact that Indonesia has poor Infrastructure.
· Indonesia is a series of Islands surrounded completely be large water bodies increasing the risk of higher amounts and more intense tsunamis. · Increased risk due to location and surroundings · Increasing amounts of plastic pollution causing the death of sea animals including fish · Air pollution created by the huge population of Indonesia and their regular use of transportation vehicles that let out greenhouse gases in the environment · Unclean and polluted breathing air · Diseases triggered from the pollution created and spread in the air and water 8/10 · Providing Canadian businesses information about these situations and the reasons or likeliness of their occurrence. · Regularly checking updates on news or other statistics that provide information on the natural disaster occurrence patter in Indonesia. · Getting an insurance for your business so that even if you bear a loss due to some kind of a natural disaster you have the insurance to cover for you and so you won’t be completely broke or in loss. · Be prepared for any circumstances you may have to face in case of the occurrence of a natural disaster in Indonesia during the period of time you stay there for · Be aware of the regular climate and disaster conditions in Indonesia InternationalMarketinga) Thepotential market size for a simple consumer product in Indonesia would be 176,764700of their total population. This amount would be considered the middle classpopulation of Indonesia which is continuously growing and has an annual growthrate of 5.7%.
The consumer product is a light and easy steaming iron createdfor the lower-middle class population of Indonesia which will be priced at$9.99. The average salary for jobs in Indonesia is approximately 163,696,498Indonesian rupiah (IDR) per year which is about $15, 000 in Canadian dollars. Thepercentage of adults between the ages of 25-45 earning the average amount ofsalary in Indonesia is 67.66%. b) Ifit is a food product it must not be decayed or decomposed or something thatmight be harmful to humans, animals or the environment and should have a productshelf life of 3 months after its arrival at the destination port.
I would makesure the product has no green on it as the colour green is forbidden inIndonesia due to certain religious beliefs. c) Labellingproduct in Indonesia must be in Indonesian language, roman text and Arabicnumerals. The product packaging must include the name of the product, netweight or net volume using metric units, name and address of manufacturer,registration number, list of ingredients or materials used to make the product,expiry date, production date or production code.
In Indonesia, according to thelaw the geographical information is compulsory so the product must say where itwas made or manufactures as this indicates the region of origin of the goods orproducts. This allows consumers to be aware of the geographical factors relatedto the country about the product such as natural, human, and the quality of theproduct. d) Iwould recommend the decentralized market entry strategy to launch the steamingiron because the labour and material costs in Indonesia are a lot less thanthat of Canadian costs. Manufacturing the steaming iron in a manufacturingfacility located in Indonesia and selling the product there would save us manyexpenses such as shipping, labour and material costs. The Canadian companycould hire a sales force there and even license its brand to a localmanufacturer.
If the Canadian company grows big and prospers quickly it mightconsider buying foreign companies to make the product. e) Whenadvertising and promoting the steaming iron, the strategy that would work bestis creating a new ad strategy because Indonesia consists of significantcultural differences from Canada and their consumer market has a differentthinking and way of perceiving an advertisement which is why I would have tocompletely change the existing a for the steaming iron. . Some modifications Iwould add to the ad is remove all green colour from the ad since the colourgreen is forbidden in Indonesia, create a television, radio and newspaperversion of the ad since Indonesian use the television and read the newspaper ona daily basis. The radio is by far the most important and frequently usedmedium in Indonesia.
f) Thestatus of social media in Indonesia is described as one of the top five socialmedia markets in the world. Indonesia is quickly figuring out the benefits ofbeing exposed to multiple social media as Twitter, Facebook and Instagram.About one third of the Indonesian population actively uses the internet that is88 million or 35% of the total population of Indonesia. This amount has grown15% over the past 12 months2. Nearly 90% of socialmedia users are below the age of 34 and about 54% of the social media users arebetween the ages of 16-24.
This tells us that the young and new generation isactively taking part latest advancements and is quickly being exposed to newtechnology. g) About326.3 million SIM cards are owned in Indonesia which is almost double the totalpopulation of Indonesia.
This tells us that, on average every mobile user owns2 SIM cards. Approximately 30 million teenagers in Indonesia use the interneton a regular basis. 69% of Indonesians use computers, 34% sue laptops, 52% usehand phones, 21% us smartphones, and 4% use tablets.3 Recommendations and ConclusionI would recommend that a Canadiancompany in the infrastructure sector should invest in the Indonesian market tosupport its energy sector. Multiple opportunities exist for Canadian businessesto expand and grow. Indonesia would be a good choice when considering a newmarket for expansion purposes because they have a growing middle class whoseexpenditures are also growing at a very fast pace. Moreover, market analystssay that this group of people is beginning to purchase beyond just the daily orbasic necessities of life. Middle class families that earn an average salaryare starting to put up multiple air conditioners around their homes and nearly 25%of them now own cars.
4Therefore, creating a low-budgeted product and targeting the middle-classpopulation of Indonesia will result in great success and profit. Also,Indonesia provides many opportunities to invest in Indonesia’s infrastructuresuch as pipelines, storage, reserves, oil trading hubs, shipping destinationsand electricity supply. They are in need of expertise and quality work whichCanadian businesses can provide them with. Canada can make new pipelines forthe distribution of the oil in Indonesia to happen smoothly or open up new oiltrading hubs for Indonesia to conveniently trade. The drawbacks in starting abusiness or investing in Indonesia is the unexpected violence against oneanother and the current economic state of the country.
The economic stabilityof Indonesia directly relates to the infrastructure, so if a Canadian businesswere to invest in the infrastructure sector of Indonesia, the economy would bein a better state than it currently is and would be more stable leading to awin-win situation in which both sides are satisfied. Indonesia holds acompetitive advantage in the energy sector, in the mining of crude oil andpetroleum gas. Indonesia has an abundance supply of these natural resourceswhich they are able to export to other countries like the United States andChina.
Indonesia has the ability to produce oil, petroleum and coal at a fasterand more efficient rate than other countries which gives it a competitiveadvantage because it can produce and extract these products with no loss andtrade it for products, goods or services they need and are not capable ofproducing in their homeland.