Strategic Management of PT HM Sampoerna Tbk.

Compiled by:
Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
© 2015 International ICT Business
Lecturer by:
Dr. Ir. Yudi Pramudiana, MM., MT.
Risris rismayani, SMB., SPd, MM.

“What do
company want
to become?”
Strategies are the means by which long-term
objectives will be achieved.
“What is
company
business?”
Result = Strengths and weaknesses
•Are an organization’s controllable activities
that are performed especially well or poorly.
•Strengths and weaknesses are determined
relative to competitors
• Strengths and weaknesses may be
determined relative to a firm’s own objectives.
Result = Opportunities and Threads
•Economic
•Social
•cultural
•Demographic
•Environmental
•Political
•Legal
•Governmental
•Technological
•Competitive trends and events that
could significantly benefit or harm an
organization in the future
As specific results that an organization seeks
to achieve in pursuing its basic mission.
“Long-term” means more than one year.
They state:
• direction
•aid in evaluation
•create synergy
•reveal priorities
•focus coordination
•provide a basis for effective planning,
organizing, motivating, and controlling
activities.
Objectives should be:
•Challenging
•Measurable
•Consistent
•Reasonable
•clear. In a multidimensional firm, objectives
should be established for the overall company
and for each division.
Successful strategy
implementation requires
the support of, as well as
discipline and hard work
from, motivated managers
and employees.
Successful strategy implementation depends on
cooperation among all functional and
divisional managers in an organization.
Effective strategy evaluation allows an organization to:
•capitalize on internal strengths as they develop
•exploit external opportunities as they emerge
•recognize and defend against threats
•mitigate internal weaknesses before they become
detrimental.
Business strategies
may include :
•geographic expansion
•Diversification
•Acquisition
•product development
•market penetration
•Retrenchment
•Divestiture
•Liquidation
•joint ventures.

Although not a guarantee for success, strategic
management allows organizations to make :
 effective long-term decisions
 execute those decisions efficiently
 take corrective actions as needed to ensure
success.

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 2
Business Vission and Mission

 PT Hanjaya Mandala Sampoerna Tbk.
("Sampoerna") is one of the leading cigarette
manufacturer in Indonesia.
 produce a number of brands of cigarettes are
known, such as Sampoerna Kretek, A Mild, as
well as the "King of Kretek" legendary Dji Sam
Soe.
 An affiliate of PT Philip Morris Indonesia and
part of Philip Morris International, the leading
cigarette manufacturer in the world.

1913
Liem Seeng Tee, a Chinese immigrant, began
making and selling hand-rolled cigarette in his
home in Surabaya, Indonesia. His small business
was one of the first companies to produce and
market cigarettes and white cigarettes.

1930
 Liem Seeng Tee later changed the family name and
the name of his company to Sampoerna, which
means "perfection".
 After developing his business, he moved both his
family and his factory to an abandoned complex of
buildings in Surabaya later renovated and named
Taman Sampoerna.

1959
Sampoerna Leadership switch to the second
generation under the leadership of Aga Sampoerna,
which focuses on the production of Clove
Cigarettes Hand (SKT) premium.

1978
The third generation family Sampoerna, Putera
Sampoerna, took over the company, and
accelerated the growth of Sampoerna.

1989
Sampoerna launched brand A mild in Indonesia
1990
 Sampoerna into a public limited company with
modern corporate structure and initiate a period of
investment and expansion.
 Sampoerna managed to strengthen its position as
one of the leading companies in Indonesia.

2005
Sampoerna's success attracted the attention of
Philip Morris International Inc. (PMI), one of the
leading tobacco company in the world. Finally, in
May 2005, PT Philip Morris Indonesia, an affiliate of
PMI, acquiring majority ownership of Sampoerna.

2008
Sampoerna inaugurated cigarette clove machines
(SKM) in Karawang, West Java, with an investment
of USD 250 million.
2013
Sampoerna commemorate the 100th anniversary of
the founding of the company

 At the end of 2013, the number of employees
of Sampoerna and its subsidiaries have
reached about 33,500 people. In addition, the
Company is also working with 38 units
Cigarette Production Partners (MPS), which
are in various locations on the island of Java
in producing Clove Cigarettes Hand, and
overall has more than 56,500 employees.

Sampoerna A Mild launched in 1989 and is a
pioneer of tobacco products LTLN category (low tar
low nicotine) in Indonesia. In 2013, A Mild retaining
the position as a cigarette brand with the largest
market share in Indonesia.

Dji Sam Soe variants include segments SKT and
SKM. Dji Sam Soe Filter, Dji Sam Soe Magnum Filter,
and Dji Sam Soe Magnum Blue which was launched
in early 2014, is part of SKM segment. While Dji
Sam Soe Kretek and Dji Sam Soe Super Premium is
part of SKT segment.

Sampoerna Kretek is hand-rolled cigarettes were
first produced in 1968 in Denpasar, Bali, by Aga
Sampoerna, the second generation of the
Sampoerna family. By combining quality tobacco
and cloves, Sampoerna Kretek successfully be
hand-rolled cigarettes best-in-class.

U Mild launched in 2005 as part of a portfolio of
products LTLN with Sampoerna A Mild . U Mild
sales keep increasing since the launch, reaching
35.6% in 2013.

Marlboro was launched in Indonesia in 1984 by
PMID and is one of the largest international brands
in the market. Sampoerna distribute Marlboro in
Indonesia. Currently there are five variants
comprising Marlboro Marlboro Red, Marlboro
Lights, Marlboro Black Menthol, Menthol and
Marlboro Lights and Marlboro Ice Blast.

Adult smokers
Three Hands
Philosophy
Employees
and Business
partners
Society

Delivering high quality products in their preferred
price category
Provide competitive compensation and good
working condition for employees
Giving back to society
Building relationship with business partners
Continually seeking out in period of time what
adult smoker wants and match their expectations

•SpecificS
•MeasurableM
•AchievableA
•RealisticR
•TimedT
Sampoerna explained what their goals, and what need to
be done. Through deliver the high quality products, and
build the relationship with partners and society
The measurement is when the goals are already achieved.
So far, Sampoerna already obtained their goals and
objectives
The visions of Sampoerna are able to accept. It proofed
with what already done by those responsible for
achieving it
The visions of Sampoerna are possible to attain. It
reflects by what Sampoerna done until now
Sampoerna clearly stated that they continually seeking
out in period of time to their customer needs and tried to
match their expectations© 2015 International ICT Business

1. Providing high quality products to adult
smokers in the price category of brand
choice
2. Provide competitive compensation and a
good working environment for employees
and foster good relationships with business
partners
3. Giving contribution to the wide community

Aspects in our analysis that match with
company mission statement’s:
1. Costumers
2. Product or Services
3. Philosophy
4. Self Concept
5. Concern : Public Image
6. Concern : Employees

 Sampoerna mission is to provide a high
quality products to adult smokers in the price
category of brand choice.
 In facts Sampoerna consumers are not limited
to adults only, but also a favorite choice for
teenagers in Indonesia especially in their Mild
Variants.
 It still meets the criteria of the missions.

Firm major products and services are :
1) Sampoerna A
Including Sampoerna Clove Machine
variants such as A Mild
2) Dji Sam Soe Sampoerna
The first Handmade Clove
Cigarette produce by HM
Sampoerna.
3. Sampoerna Clove
(Handmade Clove Cigarette
produce in Denpasar, 1968)

4. U Mild
Release in 2005 as a portfolio
products along with A Mild release.
5. Marlboro
• Made by Phillip Morris International and
distribute in Indonesia by HM
Sampoerna.
• Consist of 5 variant such as : Marlboro
Red, Marlboro Lights, Marlboro Lights
Menthol, and Marlboro Ice blast

 The basic beliefs, values, aspirations, and
ethical become priorities of the firms.
 As mentioned in their mission statement that
they also focus on the activities of economic
empowerment, education, environmental
protection, and disaster management.

The firm commit their major competitive
advantage as mentioned in their mission
statement. Such as :
1. Provide high quality products
2. Price category of brand choice
3. Competitive compensation
4. Good working environment for their
employees
5. Maintains good relationship with business
partners
6. Contribution to the wide community

 The firm is highly response to the social,
community, and environments. As their
mission to give a contribution to the wider
community.
 By giving a contribution to the community,
they also build their public image.

 Employees become a valuable asset in the HM
Sampoerna.
 Compensation, work environment and good
opportunities for career development and
self-esteem is a key element in building
employee motivation and productivity in the
firm as mentioned in the mission statements.

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 3
The External Assessment

 Highly unattractive =1
 Mildly unattractive =2
 Neutral =3
 Mildly attractive =4
 Highly attractive =5

Current Future
Number of
quality balance
competitor
2 2
Product features 3 3
Capacity
increase
3 4
Diversity of
competitors
3 3
Overall 2,75 3

Current Future
Economic of scale 5 4
Product
differentiation
3 3
Brand identification 4 4
Switching Cost 3 3
Access to
distribution channels
3 3
Capital Requirement 1 1
Access to technology 3 3
Government
protection
3 3
Experience effect 4 4
Overall 3.22 3.44

Current Future
Assets
specialization
3 3
Cost to exit 1 1
Government and
social restriction
2 3
Overall 2 2.33

Current Future
Number important
buyers
4 4
Buyers switching
cost
2 3
Buyers threat of
backward
integration
2 2
Industry threat of
forward integration
2 2
Contribution to
quality or service of
buyer’s product
4 4
Buyer’s profitability 4 4
Overall 3 3.17

Number of important
suppliers
2 2
Availability of
substitutes for
supplier product
2 2
Differentiation or
switching cost of
supplier’s product
3 3
Suppliers of
contribution to
quality or service of
the industry product
4 4
Important of the
industry to suppliers
profit
4 4
Overall 3 3

Current Future
Availability of
close
substitutes
3 3
User’s switching
cost
2 3
Substitute
producer’s
profitability &
aggresiveness
3 3
Substitutes
price/ value
2 2
Overall 2 2.75

Current future
Barriers to entry 3.11 3
Barriers to exit 2.33 2.67
Rivalry among
competitors
2.75 3
Power of buyers 2.5 2.67
Power of
suppliers
3.6 3.6
Availability of
substitutes
3.75 4

Current Future
Overall industry
assesment
3 3.16

Industry Analysis: The External Factor
Evaluation (EFE) Matrix
CompetitivePoliticalCultural
TechnologicalEnvironmentalSocial
GovernmentalDemographicEconomic
Summarize & Evaluate

WEIGHT
 indicates the relative
importance of that
factor to being
successful in the firm’s
industry.
 ranges from 0.0 (not
important) to 1.0 (very
important).
 The sum of all weights
assigned to the factors
must equal 1.0
RATING
 indicate how effectively
the firm’s current
strategies respond to
the factor.
4 = the response is
superior
3 = the response is
above average
2 = the response is
average
1 = the response is
poor.

EFE – HM Sampoerna tbk.
Key External Factors Weight Rating
Wtd
Score
Opportunities
1. Plan affirmation of "RUU
Pertembakauan"
0.10 2 0.20
2. Indonesian smokers are the
second highest in the world
0.20 4 0.80
3. Demand for cigarette increasing
(8%) anually
0.15 3 0.45
4. Exporting of cigarette growing (7,4%-
10%) anually
0.10 3 0.30
5. Indonesia is growing 1.49% anually in
population
0.10 3 0.30

EFE – HM Sampoerna tbk. (cont’d)
Wtd
Score
Opportunities (cont’d)
7. Variant invention 0.13 4 0.52
8. Smoking has became a new urban
lifestyle
0.12 3
0.36
9. Inovation Of LTLN In Cigarette
Product
0.10 4 0.40
Total 1.00 3.33

Wtd
Score
Threats
1. Increase in cigarette’s tax rate of
8.72% on average
0.20 3 0.60
2. Trend towards healthy life 0.20 4 0.80
3. Increase in cigarette industry total
production of 5.55%
0.10 2 0.20
4. Government Regulation Of Tobacco
Advertising Restrictions
0.10 2 0.20

Wtd
Score
Threats (cont’d)
5. Increasing on tobaco price of 25% 0.20 3 0.60
6. Demand for electric cigarette growing
recently
0.05 1 0.05
7. Probability Indonesia join FCTC 0.10 1 0.10
8. MUI statement of cigarette prohibition 0.05 1 0.05
Total 1.00 2.60

HIGHEST POSSIBLE Total weighted score is 4.0
 Organization response is outstanding to threats and
weaknesses
Industry Analysis EFE
LOWEST POSSIBLE Total weighted score
is 1.0
•Firm’s strategies not capitalizing on
opportunities or avoiding threats
AVERAGE Total weighted score is 2.5

opportunity
Total weighted score of 3.33
• Is near to the highest score of 4
• Indicates that HM Sampoerna tbk. is doing
excellent, taking advantage of the existing
opportunities in its industry.
threats
• Is above the average (midpoint) of 2.5
• Indicates that HM Sampoerna tbk. is pretty
well in minimizing the potential adverse
effect of external threats

Industry Analysis: Competitive Profile
Matrix (CPM)
Identifies firm’s major
competitors and their strengths
& weaknesses in relation to a
sample firm’s strategic positions
4 = major strength
3 = minor strength
2 = major weakness
1 = major weakness

Sampoerna Gudang
Garam
CSF’s Wt Rating Wt’d
Score
Rating Wt’d
Score
Market share 0.25 4 1 3 0.75
Fin position 0.15 4 0.60 2 0.30
Prod. Variant 0.10 3 0.30 4 0.40
Cons. Loyalty 0.10 4 0.40 3 0.30
Sales Distr 0.15 3 0.45 3 0.45
Global Exp. 0.15 4 0.60 3 0.45

Sampoerna
Gudang
Garam
CSF’s (cont’d) Wt Rating Wt’d
Score
Rating Wt’d
Score
Price competitive 0.05 2 0.10 4 0.20
Mgt. experience 0.05 3 0.15 4 0.20
Total 1.00 3.60 3.05

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 4
The Internal Assessment

 Refers to the process whereby a firm
determines the costs associated with
organizational activities from purchasing raw
materials to manufacturing product(s) to
marketing those products.

HM SAMPOERNA GUDANG GARAM
Raw materials are
mostly sourced
domestically
The raw materials,
notably tobacco leaf
and cloves
Invested in logistic
infrastructure to
enhance our inventory
control system in our
warehouses.

•Supporting the
business entirely by
providing high quality
products to the adult
smokers in Indonesia
•Delivering quality
and innovation as well
as high corporate
quality standard
•Serving both the fast
growing light and
mild segment and the
full flavour segment,
providing both the
choice and the quality
associated with
Gudang Garam’s
name

Sampoerna sells and
distributes cigarettes
through a total of 105
sales offices located
on the islands of
Sumatra, Java,
Bali,Kalimantan, as
well as Eastern
Indonesia
Produced sound
revenue and earnings,
and has embarked on
a significant
investment drive to
sustain the prospects

Providing competitive
compensation and
good working
conditions for
employees and
building good
relationship with
business partners
Employee welfare
remains a priority
both at all operational
premises and through
the provision of social
and sports facilities,
health and safety
routines.

•Sampoerna operates
9 manufacturing
facilities in Indonesia
•Sampoerna has
partnership with 38
third-party operators
Foreign exchange
exposure does arise from
time to time in periodical
purchases of
machinery/equipment
from overseas suppliers
and, to lesser degree,
from the routine
procurement of imported
raw materials such as
filter material, flavours,
and spare parts

Sampoerna commit to
running the
company’s program
for serving the all
stakeholders through
develop, and maintain
the standard and
integrity of the
company.
As part of our overall
branding strategy, we
refreshed the pack
design of our leading
SKM (machine made)
and SKT (hand made)
products

IFE – HM Sampoerna tbk. (2013)
Key Internal Factors Weight Rating
Wtd
Score
Strengths
1. Increasing in ROE 33% from 1750
to 2269 IDR
0.10 4 0.40
2. Best company in term to satisfy the
customers (2013award)
0.20 4 0.80
3. HMS is the market leader in Tobacco
Industry
0.15 4 0.60
4. Increasing in total revenue by 12.6% 0.10 3 0.30
5. HMS has lot of variant product 0.10 3 0.30

IFE – HM Sampoerna tbk. 2013 (cont’d)
Wtd
Score
Strengths (cont’d)
7. HMS has loyal customers 0.10 4 0.40
8. HMS achieve 2013 Top Brand Award 0.15 4 0.60
9. Increased in customer 8,6% 0.10 3 0.30
Total 1.00 3.70

Wtd
Score
Weaknesses
1. Decreasing in sales volume of SKT
13%
0.10 2 0.20
2. Work termination of 2700 labors in 2
main factories
0.30 4 1.20
3. Unaffordable price caused by
promotion and material cost
0.25 4 1.00
4. Slow growth on certain product 0.10 3 0.30

Wtd
Score
Weaknesses (cont’d)
5. Haven’t had the ability to compete in
a Global Market
0.10 2 0.20
6. Inappropriate in capital allocation 0.15 4 0.60
Total 1.00 3.50

HIGHEST POSSIBLE Total weighted score is 4.0
 Organization response is outstanding to
threats and weaknesses
Industry Analysis IFE
LOWEST POSSIBLE Total weighted score
is 1.0
•Firm’s strategies not capitalizing on
opportunities or avoiding threats
AVERAGE Total weighted score is 2.5

strengths
• Indicates that HM Sampoerna tbk. is doing
excellent optimizing their ability and
resulting giving a power for them to stand
as a market leader in its industry.
weaknesses
• Indicates that HM Sampoerna tbk. Is doing
excellent managing their weaknesses so it
won’t threaten their position in the market.

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 5
Strategies in Action

 To offer the best smoking experince to adult
smokers in Indonesia
 Continually seeking out what adult smokers
prefer and delivering the best products to
match their expectations
 Create a reputation for quality innovation as
well as high corporate governance standard

 Definition: Strategy is organization’s pattern
of response to its environment over a period
of time to achieve its goals and mission
 Concept:The concept of strategy has been
borrowed from the military and adapted for
use in business

 Implemented Integrated Marketing
Communication (IMC) especially in building A
Mild brand (late 1980) Sales
 Division has a good digital mapping
technology which able the company to be
more accurately do the brand building in with
their traditional retailer

 Backward
 Philip Morris International Inc.
 Forward
 PT ASIA TEMBAKAU
 PT HARAPAN MAJU SENTOSA
 PT PERSADA MAKMUR
INDONESIA
 PT UNION SAMPOERNA
DINAMIKA
 PT AGASAM
 PT GOLF TAMAN DAYU
 PT HANDAL LOGISTIK
NUSANTARA
 PT PERUSAHAAN DAGANG
DAN INDUSTRI PANAMAS
 PT SAMPOERNA PRINTPACK
 PT TAMAN DAYU
 PT WAHANA SAMPOERNA

Market Penetration Market Development Product Development
•Advertising
expenditure
•Publicity effort

liquidation Retrenchment
 In May, 2005, Philip Morris
International, at that time a
subsidiary of the Altria
Group, completed the
acquisition of 97.95% of the
company. Sampoerna
reported 2006 net sales of
29.55 trillion rupiah
(approximately $3.22bn
using the February 22,
2008 exchange rate)
resulting in 3.53 trillion
rupiah net income.
 PT HM Sampoerna cut off
2.700 it’s workers in 2 of
it’s handmade cigarette
clove (SKT) factories in East
Java (Lumajang and Jember)
because the costumer
preference of that product
was change which lead SKT
market to constantly
decreased since 2012 until
2013.

 Focus – Best Value
HM Sampoerna is a little bit expensive
rather than other cigarette’s product.
Because, they offer best quality of tobacco

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 6
Strategy Analysis and Choice

Opportunities:
1.Plan affirmation of "RUU
Pertembakauan"
2. Indonesian smokers are the second
highest in the world
3. Demand for cigarette increasing (8%)
anually
4. Exporting of cigarette growing (7,4%-
10%) anually
5. Indonesia is growing 1.49% anually in
population
6.Variant invention
7. Smoking has became a new urban
lifestyle
8. Inovation Of LTLN In Cigarette
Product
Threats:
1.Increase in cigarette’s tax rate of
8.72% on average
2. Trend towards healthy life
3. Increase in cigarette industry total
production of 5.55%
4. Government Regulation Of Tobacco
Advertising Restrictions
5. Increasing on tobaco price of 25%
6. Demand for electric cigarette growing
recently
7. Probability Indonesia join FCTC
8. MUI statement of cigarette
prohibition
Strengths:
1. Increasing in ROE 33% from 1750 to
2269 IDR
2. Best company in term to satisfy the
customers (2013award)
3. HMS is the market leader in Tobacco
Industry
4. Increasing in total revenue by 12.6%
5. HMS has lot of variant product
6. HMS has loyal customers
7. HMS achieve 2013 Top Brand Award
8. Increased in customer 8,6%
Weaknesses:
1.Decreasing in sales volume of SKT
13%
2. Work termination of 2700 labors in 2
main factories
3. Unaffordable price caused by
promotion and material cost
4. Slow growth on certain product
(Avolution)
5. Haven’t had the ability to compete in
a Global Market
6. Inappropriate in capital allocation
1. New products innovation for global
target market
2. Looking for investor
3. Increasing the promotion to gain
brand awareness and expand the
business
4. Maintaining the market power of HM
Sampoerna popular product(mild)
1. Making the strategies to promote
the certain product (Avolution) in the
global market
2. Making new variant inventions
3. Promotion through sponsoring the
big events to gain brand awareness
of the customer
1. Decrease the producing of the
certain products
2. Making the CSR strategy to deal and
anticipate the MUI statement and
government regulation
3. Brand image of a certain products
4. Taking the advantage from the
annually events to promote the
products
1. Joining to the anti-cigarette
campaign to gain brand awareness
2. Controlling the market through
decreasing prices of the certain
product
3. Conduct the research to find the
cheaper raw materials
4. Promoting the Brand image “The
Finest Quality” to the customer

FINANCIAL POSITION (FP) Ratings
HMS current ratio is higher 79% compared to GG 5.0
HMS give ROE (76.4%) significantly higher than GG (14.9%) 5.0
HMS has 5385 billion less than GG in net working capital 4.0
Earning per share for HMS (Rp 2468) is higher than GG (Rp
2250)
4.0
18.0
COMPETITIVE POSITION (CP) Ratings
HMS got highest percentage of market share in cigarettes
industry with 36.1%
-1.0
HMS can satisfy their customer needs; proven by award -2.0
-3.0

STABILITY POSITION (SP) Ratings
The exchange rate for rupiah has weakened -5.0
The new regulation for tax of 10% of excise duty has made
the industry not stable
-4.0
The price range for cigarette products within industry is
not significantly different, but still have influence on sales
of products
-2.0
Barriers to exit from cigarette industry is really costly -5.0
-16.0
INDUSTRY POSITION (IP) Ratings
-5.0
-4.0
-2.0
-5.0

 SP Average is -16.0÷4 = -4.0
 IP Average is –
 FP Average is 18.0÷4 = -4.5
 CP Average is -3.0÷2 = -1.5
Directional Vector Coordinate :
X-axis -1.5+(ip)
Y-axis -4.0 -4.5=

The Internal and External (IE) Matrix

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 7
Management and Operation
Issues

Key
resources
Customer
segment
Cost
structure
Revenue
stream
Distribution
channel
Customer
relationship
Value
proposition
Key
partnership
Key
activities
INFRASTRUCTURE CUSTOMER
OFFER
FINANCE

 MAN
 MONEY :profit, shareholder investment
 MATERIAL :tobacco leaf & clove
 MACHINE :SKM
 INFORMATION

1. Providing high quality products to adult
smokers in the price category of brand
choice
2. Provide competitive compensation and a
good working environment for
employees and foster good relationships
with business partners
3. Giving contribution to the wide
community
Three Hands Philosophy

 Sampoerna has a good relationship among it’s
costumer. Sampoerna are fully committed to
producing high quality with reasonable price for
adult consumers. By committed to keep the
costumer satisfaction level higher, indirectly
Sampoerna also maintain it’s relationship with
them. Sampoerna can reach their good
performance in costumer relationship. This is
achieved through offering relevant products and
innovations to meet the costumer changing
preferences.

 PT Panamas as the sole distributor of PT HM
Sampoerna’s product.

Adult smokers

 EXTERNAL
-CUSTOMER PREFFERENCE
-SKM INTENSIVE
-
 INTERNAL
-LOT OF VARIANT
-ACQUISITION BY PHILIP MORRIS
INTERNATIONAL
-PIONEER OF LTLN CIGARETTE

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 8
Marketing, Finance/Accounting,
R&D, and MIS Issues

MARKETING

A-mild, more toward that effort
Demographic segmentation divides the
market into groups based on variables
such as age, gender, family size, family
life cycle, income, pekerjaann,
education, religion, race and
nationality.
Sampoerna A-mild, divide society into segments of educated people
who will truly understand the dangers of smoking but still choose to
smoke. In the segment of educated people, there is a potential
consumer for cigarette manufacturers, namely well-educated young
people who know the effects of smoking, but to take the risk for
smoking.
Later can become long term customers for the company, because
smoking can cause entanglement. If the young consumers are bound,
then the company will have the potential to be loyal consumers in the
long run. © 2015 International ICT Business

For the PT HM Sampoerna Tbk will
continue to try to penetrate the
premium for tobacco products. Such as
by launching a new product named
Avolution.
Avolution been thrown into the market
to enliven the market in Indonesian
kretek segment with a target market
for adult smokers. The target market
of cigarettes Avolution is aged adults
aged between 25 to 29 years

LOW PRICE
LOW QUALITY
HIGH PRICE
HIGH QUALITY
Sampoerna
Bentoel
Djarum
Gudang Garam
Dunhill
Pall Mall
Apache
Marlboro
Esse
La Light

Finance

 Current assets were IDR 21.2 trillion as of
December 31, 2013, relatively the same as
at 31 December 2012
 Noncurrent assets were slightly higher at IDR
6.2 trillion as of December 31, 2013
compared with IDR 5.1 trillion as of
December 31, 2012
 Total assets increased from IDR 26.2 trillion
as at December31, 2012 to IDR 27.4 trillion
as at December 31, 2013

 Net cash used in investing activities increased from IDR 0.9
trillion in 2012 to IDR 1.1 trillion in 2013
 Driven primarily by higher capital expenditure by IDR 0.7
trillion to IDR 1.5 trillion in 2013

 Revenue: Sampoerna’s excise payment
contributed 29.6% of Government excise
revenue from tobacco products in 2013 of
IDR 103.6 trillion*

 In 2013, total financing income was IDR 49
billion, mainly representing interest income
generated from cash in bank and receivable
from related parties
 Profit attributable to the Owner of the Parent
for 2013 was IDR 10.8 trillion, up by 8.8%
from the IDR 9.9 trillion achieved in 2012

Research & Development

As we know from the HM Sampoerna long term objectives :
 To offer the best smoking experince to adult smokers in
Indonesia
 Continually seeking out what adult smokers prefer and
delivering the best products to match their expectations
 Create a reputation for quality innovation as well as
high corporate governance standard
In order keep it’s competitive advantages in balance, HM
Sampoerna should conduct a proper Research &
Development methods that can fulfilled those objectives as
a parameter for their proper research developments.

We emphasize several aspects that suitable with the company long term
objectives :
1. Conduct a periodical survey regarding to the costumer satisfaction of their
smoking experiences while they are consuming HM Sampoerna products &
compare with the other brand.
2. After the surveys and questionnaires, the results from the data collection
were analyzed by HM Sampoerna R&D department in order to analyze the
changing pattern of the costumer preferences and match with their
demands.
3. HM Sampoerna was the pioneer of the mild clove cigarette since a long time
ago, so it is very famous among Indonesian smokers and HM Sampoerna
has a strong brand identity. Beside the strong brand identity that the
company has, HM Sampoerna comitted to keep it’s a quality in a
sustainable top performace. That’s why all of it’s product line has their own
costumer segmentation that keep grows the time by time.
4. As we know that hM Sampoerna was sold to Phillip Morris international, so
the business activities starting from it’s acquition period untill are using the
same R&D method from the previous owner (Putera Sampoerna).
5. Even that the price of the Sampoerna mild variants are a little bit higher that
the other competitiors, but the line of products for Sampoerna Mild
dominate the market of the mild cigarette machine in Indonesia.

We couldn’t find the exact contribution
percentage of the total cost that HM Sampoerna
spend since in R&D activities because it is not
mentioned in it’s annual report.

MIS

 ERP (enterprise resource planning ) from
ORACLE
Information systems that support the
transaction or the daily operations in the
management of company resources. The
resources include money, people, machines,
spare parts, time, materials and capacity.
 PeopleSoft HR

 Make the supply chain management (supplier,
warehouse,distribution,etc) more efficient
and effective
 Monitoring key performance indicator more
better
 support customer service, better support
specific industry vertical (vertical industry),
and also more supportive of the decision-
making process (decision support)

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 9
Strategy review, Evaluation
and Control

1. Conduct the specific advertisement for the
marketing
2. Personal Selling efficiency
3. Quality control
4. Products concistency

STRATEGIC EVALUATION ASSESMENT
MATRIX - HM SAMPOERNA TBK
HAVE MAJOR CHANGES
OCCURED IN THE
FIRM’S INTERNAL
STRATEGIC POSITION ?
HAVE MAJOR CHANGES
OCCURED IN THE FIRM’S
EXTERNAL STRATEGIC
POSITION ?
HAS THE FIRM
PROGRESSED
SATISFACTORILY
TOWARD ACHIEVING ITS
STATED O BJECTIVES?
RESULT
NO YES YES
TAKE
CORRECTIVE
ACTION

 Alternatives
1. Budget cutting cost
2. Reduces marketing cost
3. Increase product price
4. Layoff current workforce
= so they can maintain their profit margin at
least in the same rate as their current
position

 HM Sampoerna is a pioneer cigarette
company in Indonesia, so they have a strong
brand awareness and for this short term
period, they don’t need to change and
implement any new strategy.
 HM Sampoerna just have to be consistent
with their current strategy, especially in their
product variants quality.

CSR AND BUSINESS ETHIC

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 10
Business Ethics/ Social Responsibility/
Environmental Sustainability

Controversial Tobacco Ad Pulled Following
Public Outrage

Sampoerna believes that a sustainable business
should look beyond financial growth and
performance. Instead, we must also make socially
responsible investments in support of both people
and planet. We are committed to sustainable social
investments that benefit our employees and business
partners, environment, and communities where we
operate and source tobacco and cloves.

ACCESS TO EDUCATION
ECONOMIC OPPORTUNITY
EMPOWERING WOMEN
DISASTER RELIEF AND PREPAREDNESS

Restoration Spring Mountains Region Arjuna
June 25, 2013
PT HM Sampoerna Tbk. ("Sampoerna") today
launched a restoration program springs Arjuna
Mountains Region. With the launch of the
program, Sampoerna 27,000 trees planted
bamboo and manufacture of 100 recharge wells
throughout the year 2013.

 Labour rights:
◦ child labour
◦ forced labour
◦ right to organise
◦ safety and health
 Environmental conditions
◦ water & air emissions
◦ climate change
 Human rights
◦ cooperation with paramilitary forces
◦ complicity in extra-judicial killings
 Poverty Alleviation
◦ job creation
◦ public revenues
◦ skills and technology

Agung Andara
Rafa Najiya
Akyes Dapilca
Kenang Kana
Zul Asmi Retno
Chapter 11
Global/International Issues

INTERNATIONAL EXPANSION MODEL
-Brunei Darussalam

 Population: 408,786 people
 Smoker: 9% from population or about 37,000
people
 GDP in 2013: 24184.67 US dollars
 GDP growth: 2.9%

 Political stability
Brunei has outstanding record of political stability that
has been led by a benevolent monarchy that can be
traced back, in an unbroken line of succession, over
600 years to when the first Sultan was installed in
1363.

Smokefree HealthCare Facilities Yes
Smokefree Universities Yes
Smokefree Government Facilities Yes
Smokefree Indoor Offices Yes
Smokefree Restaurants Yes
Smokefree Pubs & Bars Yes
Smokefree Public Transport Yes
All Other Indoor Public Places
Smokefree
No
Funds for Smokefree Inforcement No

 Brunei does not allow the tobacco industry to
participate in health policy development, accepts no
contributions from the tobacco industry or CSR
activities, gives no benefits to the industry, has no
unnecessary interaction with the industry, and requires
the industry’s representatives to provide information
periodically. It must be noted that Brunei does not
grow tobacco, has no cigarette manufacturing facilities,
and has a very small tobacco market.
 Brunei Darussalam became a Party to the WHO
Framework Convention on Tobacco Control

A. Culture and Lifestyle
 Smoking in Brunei in the days of old was seen as a cultural
thing. They said “if you do know how to smoke you have
not grown up yet”
 Cigarettes were not only served during wedding
ceremonies but were also served during other social events
as well, even strictly religious ones such as "tahlil" and "doa
selamat" ceremonies, as well as circumcision events and
the likes — in fact at any social gathering. Without
cigarettes being served at the end of the meal, the event
was seen as incomplete

B. Procedure of Investment
 The regulations require any person who imports, distributes,
sells or offers for sale, permits to be sold or offered for sale or
has in his possession for sale, any tobacco product to be
licensed by the Director-General
 Tobacco (Licensing of Importers, Wholesalers and Retailers)
Regulations, 2007 establish the requirements to apply for and
maintain a retail license and set forth the sanctions related to
licensure violations

 All tobacco products are imported, and the Ministry of Health, as the
Tobacco License Authority, requires licenses for all importers and retailers
of tobacco products. A retail license costs BND 300 per year, while an
import license costs BND 2,500 per year
Number of Licensed Tobacco Retailers and Importers in Brunei
Darussalam, 2008-2012

 Government revenue from tobacco tax 2005 –
2011 (figures in USD)*

 MANY small vendors have ceased selling tobacco products
saying it is no longer profitable due to costly licensing and
stricter policing from health authorities.
 Business owners said the annual license to sell cigarettes has
risen from $500 to $2,500, under amendments to the Tobacco
Order, making the profit margin for selling cigarettes
negligible for small businesses
 Other convenience stores have also stopped selling cigarettes
after the Ministry of Health informed them they were in
violation of laws that prohibit businesses from selling tobacco
products within a kilometre radius of schools

key success factors for preliminary investment
stage in Brunei
 Supportive Environment
 Infrastructure
 Flexible Policies
 Finance, Bank and Insurance
 Taxation

 The country with the lowest level of tobacco
industry interference was Brunei (29) – the
only country in Shoutheast Asian with a score
under 50.
 list of countries by annual per capita
consumption of tobacco cigarettes brunei
ranking is 72 with number per cigarette per
adult per year 751.

 have a diverse and experienced team of
professionals from seven different countries
with an average experience of nearly 20 years
in HM Sampoerna across a wide range of
markets and functions
 one key to the success of Sampoerna is
adherence to the principles of good corporate
governance,
 Training programs are held regularly and
closely monitored employee participation

 Seeing the condition and the opportunity in Brunei’s
tobacco market. The best strategy to enter the market
would be export products considering that Brunei
doesn’t provide any facilities to support tobacco
industry. Export can neither direct or indirect method
such as agent or retailer.

Strategic Management of PT HM Sampoerna Tbk.

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