gbe presentation
TRANSCRIPT
General Business Environment
Presented by Bambang Wijarnako
Ex. 33 A – MMUGM Jakarta
(Case Study – PT Borneo Alam Semesta)
General Business Environment
The Content
Indonesia’s Coal Mining Industry at a glance
Company Profiles – PT Borneo Alam Semesta
Industry’s Macro Environment
Ultimate Threats of Industry’s Macro Environment
Ultimate Opportunities of Industry’s Macro Environment
Recommended Actions
Characteristic of Mining Contracting
Indonesia’s Coal Mining Industry at a glance
General Business Environment
Indonesia’s Coal Mining Industry at a Glance
3 % Global Coal Reserve
5 times production’s growth between 2000 - 2012
Contribution to Indonesia’s Gross Domestic Product 4 %
China has been The top Indonesia’s coal importer since 2009
Negative Trend on World’s Coal Price Index since January 2012
Coal’s export to China declined in 2013
Characteristic of Mining Contracting
General Business Environment
Characteristic of Mining Contracting
Capital & Labor Intensive
Business to Business Agreement (Mining License holder and Contractor)
Single or Double Rate Contract Price
There is a specific government regulation regarding mining operation
Most of mining area located in the remote area
The main consideration for the contract are the price and safety record.
Company Profiles – PT Borneo Alam Semesta
General Business Environment
Company Profiles – PT Borneo Alam Semesta
Established in May 2005 as a coal mining and heavy equipment rental company in South Kalimantan
In 2006, BAS had heavy equipment rental contract with PT Putra Perkasa Abadi and PT Bokormas Wahana Makmur
In 2008, BAS have secured contract as a Mining Contractor for PT Jorong Barutama Grestone
In 2010, BAS have secured contract as a Mining Contractor for PT Trubindo Coal Mining
In 2012, BAS have secured contract as a Mining Contractor for PT Pinang Coal
General Business Environment
Company Profile – PT Borneo Alam Semesta
In Oct 2013, BAS decided to pull off from Pinang Coal due to the payment failure.
Number of Employee : 1.070 (May 2014)
Industry’s Macro Environment
General Business Environment
Industry’s Macro Environment
THE FIRM
Mo
netary &
Fiscal Po
licies
General Business Environment
Demography
Impact LevelLow Mod High
Related Factors Population Structure based on age
Population Structure based on gender
Population Structure based on Education
Employment Structure based on Sector
Threats • Limited availability of Highly Skilled Man Power
• Lack of man power resources for leadership position
• Unbalance manpower structure based on gender
• The competency of existing experienced man power is not
suitable for mining operation.
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Opportunities • Develop skilled man power from scratch for hard
competencies and soft competencies.
• Attach the training and development program for Local
Communities into Community Development Program.
• Opportunity to develop female operator √
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Strategy Options • Develop training program on basic mining operation
competencies for local communities.
• Develop bridging training program for man power from
other sectors regarding mining operation.
• Develop training program for female operator √
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General Business Environment
Social Environment
Impact LevelLow Mod High
Related Factors Issues on Local and Non Local Employee
Pressure from Local Non Government Organization (NGO)
Kinship Relation Among Employees
• Threats • pressure to recruit the employee from local community with
very limited experience and competencies which will affect
company productivity.
• High cost of operation due to the additional activities in
approaching local NGO and traditional leaders.
• Difficult to apply the punishment to the employee when they
violate the regulation.
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Opportunities • Opportunity to develop people surrounding the mining area
in line with company strategy
• Involving the NGO in the activities that suit with their
competency and provide the benefit for the company.
• Easy to spread the information to the employee
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Strategy Options • Recruit the experience employee from the outside area and
backed up by the training and development program for local
people.
• Involving the NGO in supported activities such us security
and community development
• Communicate the company regulation properly in the
induction process .
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General Business Environment
Cultural Environment
Impact LevelLow Mod High
Related Factors • Traditional Communities
Threats • Traditional ceremony which can affect the absence rate of the
employee.
• Violation of local rules by the employee from the outside
area.
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Opportunities • Entertainment for employee form the outside area to
overcome boredom.
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Strategy Options • Apply the regulation of the absenteeism firmly
• Include the local rules in the Induction Material √
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General Business Environment
Economic Development
Impact LevelLow Mod High
Related Factors • Economic Growth
• Unemployment Rate
• Inflation
Threats • The weakening of economic growth could affect all economy
sectors.
• The inflation could affect the cost of labor
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Opportunities • Unemployment rate due to the weakening of economic will
provide the company the broad selection of candidate in the
market.
• Increasing the opportunity to get the source of fund as a
result of weakening other sectors.
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Strategy Options • Include inflation rate as variable to determine the general
salary increase.
• Put minimum wage as one of variable for raise and fall in the
contract agreement.
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General Business Environment
Monetary and Fiscal Policies
Impact LevelLow Mod High
Related Factors • Interest Rate
• Taxes
Threats • The increasing of Interest Rate will increase the total cost
because most of fleet are acquired through leasing scheme.
• The new taxes will give the company additional expenses
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Opportunities • If the company have good fleet maintenance system, the
usage of fleet which has ended the leasing period will
increase the company competitive advantage.
√
Strategy Options • The interest rate and Taxes should be considered when
proposing the price
• Develop the good fleet maintenance system to extent the
fleet’s economic life.
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General Business Environment
Information Technology
Impact LevelLow Mod High
Related Factors • Internet & Email System
• Enterprise Resource Planning
• Social Medial
• Symmetric Information
Threats • Possibility to loss productive time of the employee
• Need to develop the new competency related with ERP
• High turn over rate
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Opportunities • spread the information effectively and efficiently
• The opportunity to the develop The effective and efficient
business process
• Decrease the labor cost and transaction cost √
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Strategy Options • Develop the clear regulation the usage of any Information
and communication System including the consequences of
the violation
• Develop the effective and efficient business process based on
available IT Infrastructure and system.
• Develop Knowledge Management System to develop
employee’s knowledge and competency.
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General Business Environment
Processing Technology
Impact LevelLow Mod High
Related Factors • New Technology
• New Practices
Threats • New Technology required new investment
• New Practice required new business process and new
competencies
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Opportunities • Opportunity to escalate the productivity and cost
effectiveness√
Strategy Options • Select the appropriate technology and business practices
which suitable with company strategy.
√
General Business Environment
Natural Environment
Impact LevelLow Mod High
Related Factors • Geographical Position
• Stones Lithology
• Topographic Condition
• Rainfall Rate
Threats • Distance between pit and port will determine the final cost.
• Harder stone will increase the mining Cost
• High SR as result of topographic condition will escalate the
mining cost
• High rainfall rate will decrease the production level.
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Opportunities • The difficult natural environment condition will tend to the
higher price
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Strategy Options • Develop operating plan which is considered Geographical
Position, Stones Lithology, Topographic Condition and Rainfall
Rate
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General Business Environment
Regional Economy
Impact LevelLow Mod High
Related Factors • Regional Autonomy
Threats • Potential higher taxes as the result of new taxes applied by
the regency or province government to increase the local
revenue .
• Different minimum regional/sectoral wages for every mining
area.
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Opportunities • Easier access to mining area as result of high regional
economy growth
• Industrial relation issue could be fixed in regency level
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Strategy Options • Man power budget should be different for every area based
on the respective minimum wages.
• Operating budget should identify and include all local taxes.
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General Business Environment
Industry and Sectoral Environment
Impact LevelLow Mod High
Related Factors • Demand and Supply of The Product
• Product Price
• Industry and Sectoral Performance
Threats • The decrease of coal price and demand will affect the
production target set by the owner.
√
Opportunities • The close out of some mining contracting company provide
the competent resource in the market.
• Opportunity to re-set the salary scale as the result of
Sectoral/Industry weakening.
• Best time for reconfigure the man power ratio and structure
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√
√
Strategy Options • Slimming the organization and cut the most unproductive
employee to decrease direct and indirect labor cost.
• Review the over all business process to enhance the
effectiveness and efficiency of the operation
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General Business Environment
Governmental Environment
Impact LevelLow Mod High
Related Factors • Minimum Wages Policies
• Occupational and Health , Safety and Environment
Requirement
Threats • The increasing of minimum wages are different among
regencies.
• Increasing operating cost as the result of implementation of
the OHSE Requirement.
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Opportunities • More safety and healthier workplace business process could
escalate the company baseline.
√
Strategy Options • Rise and fall due to the change of minimum wages should be
different among projects.
• Comply all the business process to the OHSE requirement
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General Business Environment
International Political Environment
Impact LevelLow Mod High
Related Factors • Economic Integration
• International Finance
Threats • Decreasing the barrier to entry for foreign investment into
mining sector.
• Increasing the industrial rivalry in mining contracting
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Opportunities • Emergence the new investment or new project
• opportunity to have better price due to the different of
standard
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Strategy Options • Implement the quality improvement framework to increase
the effectiveness and the efficiency of the operation
• Regular training and development program to increase
employee competencies and company core competencies.
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General Business Environment
Domestic Political Environment
Impact LevelLow Mod High
Related Factors • General Election and other election
Threats • Disruption to mining operation in the election period
• Additional labor cost for the election day
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Opportunities • Additional unscheduled maintenance period √
Strategy Options • Provide special incentive for employees who work in the
election day.
• Develop the clear regulation regarding the absenteeism in the
campaign period.
√
√
Ultimate Threats of Industry’s Macro Environment
General Business Environment
Ultimate Threats of Industry’s Macro Environment
Demography • Limited availability of Highly Skilled Man Power
• Lack of man power resources for leadership position
• The competency of existing experienced man power is not
suitable for mining operation.
Social Environment • Pressure to recruit the employee from local community
with have very limited experience and competencies which
will affect company productivity.
Cultural Environment • Traditional ceremony which can affect the absence rate of the employee.
Economic Development • The inflation could affect the cost of labor
Monetary and Fiscal Policies • The increasing of Interest Rate will increase the operating
cost because most of fleet are acquired through leasing
scheme.
• The new taxes will give the company additional expenses
Information Technology • Possibility to loss productive time of the employee
Processing Technology • New Technology required new investment
• New Practice required new business process and new
competencies
General Business Environment
Ultimate Threats of Industry’s Macro Environment
Natural Environment • Distance between pit and port will determine the final cost.
• Harder stone will increase the mining Cost
• High SR as result of topographic condition will escalate the mining cost
• High rainfall rate will decrease the production level.
Regional Economy • Potential higher taxes as the relult of new taxes applied by the regency
or province government to increase the local revenue .
• Different minimum regional/sectoral wages for every mining area.
Industry and Sectoral Policies • The decrease of coal price and demand will affect the productiontarget set by the owner.
Governmental • The increasing of minimum wages are different among regencies.
• Increasing operating cost as the result of implementation of the OHSE
Requirement.
International Political • Decreasing the barrier to entry for foreign investment into mining
sector.
• Increasing the industrial rivalry in mining contracting
Domestic Political • Disruption to mining operation in the election period
• Additional labor cost for the election day
Ultimate Opportunities of Industry’s Macro Environment
General Business Environment
Ultimate Opportunities of Industry’s Macro Environment
Demography • Develop skilled man power from scratch for hard
competencies and soft competencies.
• Attach the training and development program for Local
Communities into Community Development Program.
Social Environment • Opportunity to develop people surrounding the mining
area in line with company strategy
Cultural Environment
Economic Development
Monetary and Fiscal Policies • If the company have good fleet maintenance system, the usage of fleet which has ended the leasing period will increase the company’s competitive advantage.
Information Technology • spread the information effectively and efficiently
• The opportunity to the develop The effective and efficient
business process
Processing Technology • Opportunity to escalate the productivity and cost effectiveness
General Business Environment
Ultimate Opportunities of Industry’s Macro Environment
Natural Environment • The difficult natural environment condition will tend to the
higher price
Regional Economy
Industry and Sectoral Policies • Opportunity to re-set the salary scale as the result of
Sectoral/Industry weakening.
• Best time for reconfigure the man power ratio and structure
Governmental • More safety and healthier workplace business process could escalate the company baseline.
International Political • Emergence the new investment or new project
• opportunity to have better price due to the different of
standard.
Domestic Political
Recommended Actions
General Business Environment
Recommended Actions
• Develop training program on basic mining operation competencies for local
communities.
• Develop bridging training program for man power from other sectors regarding mining
operation.
• Recruit the experience employee from the outside area and backed up by the training
and development program for local people.
• Communicate the company regulation properly in the induction process .
• Apply the regulation of the absenteeism firmly
• Include inflation rate as variable to determine the general salary increase.
• Put minimum wage as one of variable for raise and fall in the contract agreement.
• The interest rate and Taxes should be considered when proposing the price
• Develop the good fleet maintenance system to extent the fleet’s economic life.
• Develop the clear regulation the usage of any Information and communication System
including the consequences of the violation
• Develop the effective and efficient business process based on available IT Infrastructure
and system.
• Develop Knowledge Management System to develop employee’s knowledge and
competency.
General Business Environment
Recommended Actions
• Select the appropriate technology and business practices which suitable with company
strategy.
• Develop operating plan which is considered Geographical Position, Stones Lithology,
Topographic Condition and Rainfall Rate
• Man power budget should be different for every area based on the respective
minimum wages.
• Operating budget should identify and include all local taxes.
• Slimming the organization and cut the most unproductive employee to decrease direct
and indirect labor cost.
• Review the over all business process to enhance the effectiveness and the efficiency of
the operation
• Rise and fall due to the change of minimum wages should be different among projects.
• Comply all the business process to the OHSE requirement
• Provide special incentive for employees who work in the election day.
• Develop the clear regulation regarding the absenteeism in the campaign period.
General Business Environment
Thank You