Pos Indonesia as one of company that performing a delivery service and the only state-owned-enterprise that do this business. If we see the history of postal and CSI, Pos Indonesia have ever becoming the biggest company in that kind of service. But nowadays, rapid changes in this industry and the tardiness of Pos Indonesia management to deal with the change has made them lose from the competition on the same Industry. Redesigning business strategy is something that Pos Indonesia need to perform at this time to make them more competitive and can join the battle again.
History of Pos Indonesia
Kantorpos was first established in August 26, 1746, in Batavia by Governor General GW Baron van Imhoff to assure the safety of citizen’s mail, especially for those who trade from offices outside Java and those who travel from/to Netherland. The development of technology and infrastructure in Indonesia has change how Pos serve their customer.
The first change is the construction of jalan raya pos from anyer to panarukan that make it easily for Pos Indonesia to send th letter and package. The second change is the development of technology – telephone and telegraph – that come to Indonesia in the initial of 20th century.
In 1906, Pos Indonesia change its name and became Posts Telegraafend Telefon Dienst (PTT). On September 27th, 1945, it officialy became PTT Republik Indonesia. Until 1995, it already face several change on name and in 1995 it is become Perseroan Terbatas, PT Pos Indonesia (Persero) until now.
Pos Indonesia, Change or Die: An overview of Pos Indonesia Business When will be the last time you send physical mail via Pos Indonesia? For the most part of people today, physical mail is not becoming the instrument to send a message for someone anymore. It is already an old-fashioned way to communicate with. At this time, when technology is growing more and more, there are many ways to communicate easily, faster, and cheaper better than using a physical mail. Well maybe some minority still using that, but it is decreasing and in the near future, physical mail will be dissapear.
That is the most influencing factor that change how Pos Indonesia do their business. It is Technology. Technology is growing for the past decades and will still change in a more futuristic level. Short Message Services (SMS), Internet services, Electronic Mail (E-mail), and even social media has becoming Pos Indonesia’s Competitors – besides some other courier service company that also slow but sure win the competition.
One thing that Pos Indonesia have to perform now is CHANGE or DIE. The mean of change here is they need to expand their type of business and not stop in just becoming a postal company. Change means they have to adapt with all the shift in the business world. They have to grow up for a bigger vision, that is becoming a network company.
What will be the implication for the business? Of course for the first time is they have to adjust their main business from just a postal business to a more diverse business type. The second will be redefining what is the core competencies of what Pos Indonesia good at and explore it. The last one si re-branding. Until now, people in Indonesia still think that Pos Indonesia is not changing. That is what Pos Indonesia management need to conducted.
This paper will focus on the most emerging service in Indonesia that Pos Indonesia can focusing on. It is Courier Delivery Service. This kind of service has becoming the most growing business on this industry due to change in people social behavior. Pos Indonesia’s competitor has gain much profit on this business. Pos Indonesia have to grab their market in this type of product to make their business back in line.
Business Strategy Theory
In business strategy development, the first thing to do is analyzing what business are you in and what is the main characteristic on it. The tools and model that usually been used is general environment analysis. An organization especially a global one, cannot just think about their internal. They also need to pay attention on how the environment around them makes some change to the global environment that directly or indirectly influence their organization. Ireland and friends in one of their book develop some tools to identify what are the components of general environment segment that will perform change for the organization. They are Demographic, Economic, Physical, and Sociocultural, global, technological, and also political/legal.
General environment’s segment will affect not just one or two industry, but will influence all type of industry and business. While if we want to assess the condition of specific industry, we can use Industry environment analysis discovered by porter and named as “Porter’s Five Forces”. They are Threat of New Entrants, Power of Suppliers, Power of Buyers, Product Substitutes, and Intensity of Rivalry.
After all the industry analysis components been analyzed, we need to do the competitor analysis. Competitor analysis focuses on each company against which a firm directly competes. In competitor analysis, the firm seeks to understand the following: •What drives the competitor, as shown by its future objectives •What the competitor is doing and can do, as revealed by its current strategy •What the competitor believes about the industry, as shown by its assumptions •What the competitor’s capabilities are, as shown by its strength and weaknesses
After analyzing the external factor in general industry analysis, company also need to do the internal analysis. In the global economy, traditional factors such as labor costs, access to financial resources and raw materials, and protected or regulated markets can be a competitive advantage but in a small scale advantage. It is because now every firm can do the same with a little innovation in the system or resource they have. Now, the firm needs to find something different to be a bigger competitive advantage. They have to start with analyze their firm’s internal organization and finds out that they need to use a global mind-set.
A global mindset is the ability to analyze, understand, and manage and internal organization i ways that are not dependent on the assumptions of a single country, culture, or context. Because they are able to span artificial boundaries, those with a global mindset recognize that their firms must possess resources and capabilities that allow understanding of and appropriate responses to competitive situations that are influenced by country-specific factors and unique societal cultures. In finding the competitive advantage of a firm among others, there are three different aspect that will determine how will you fight with your competitors. It is resources, capabilities, and core competencies.
The last thing in developing business strategy is the company have to describe what business level they want to conducted after they understand the external condition and what they most capable in. To determined what business-level strategy to be implemented in three specific question; (1) who will be served, (2) what needs those target customers have that it will satisfy, and (3) how those needs will be satisfied. After all of that, the just have to choose kind of Business Level Strategy that devide in 5 different approach, that are (1) Cost Leadership, (2) Differentiation, (3) Focused cost leadership, (4) focused differetiation, and (5) integrated cost leadership/differentiation. A Successful company is a company that know what they capable in and how to explore it.
The Change in Business Landscape CSI in Indonesia
Business landscape in all industry is always changing and CSI is not an exception. We can see the change in four dimension of changing, political, economy, social, and technology. Political change in this industry start with Peraturan Pemerintah Nomor 5 Tahun 1995, change from Perum to PT that make the industry more flexible and no more monopoly especially in CSI. And the last political change is in 2009 when the goverment regulation that allows any company to compete with Pos Indonesia in every business unit including phsical mail delivery.
The middle class growing is also make people in Indonesia have more purchasing power and they change their buying behavior from direct
purchasing to online shopping. This make CSI is growing fast. The last change is of course the technology especially in mobile and internet technology that already change the behavior of how people communicate with others.
When we analyze more in porter’s five forces, we can see that the CSI is an attractive business. It is becouse this business is not complicated either by the business model or the use of technology. Plus the transportation network in Indonesia is growing and easier to all player run the business. All player just need to differentiate and specialize their service to grab their specific market and find their blue ocean market.
Defining what is Pos Indonesia Competitive Advantages
When we look at the competition of CSI in Indonesia, there are two big player except Pos Indonesia, JNE and TIKI. They already dominate more than 70% of CSI market in Indonesia while Pos Indonesia has only 9% share. This is for sure is not a more than 100 years experienced company got.
Starting to analyze the resources of CSI in Pos Indonesia, we can use a SWOT analysis.
The most valuable resources they already have are the power of network. Post Office in Indonesia is more than 3.800 unit and 95% of it is went online and all of that are spreading out in Indonesia, 100 district and 100% sub district. Something that none of competitors has. Regardless the differences of service quality in every post office, it is a potential opportunity to win from the competitor. They have the resources. What they have to do is make it all better.
Pos Indonesia Business Level Strategy
First, we will going to analyze the business model of CSI business in Pos Indonesia. It is a standard business model that other competitors also doing. The thing that we need to discuss more is in the value proposition. It said that they have a thrifty services but in an international standard. That is the value proposition that they want to communicate with their customer.
When we analyze more in what is international standard means after distributes some questionnaires about CSI of Pos Indonesia, it means that they have to deliver the parcel right on time. That is not what Pos Indonesia has. Unfortunately for Pos Indonesia, only less than 15% respondents express that price is the most important thing in CSI. Many of respondents said that quality, reputation, and delivery time is the most important thing.
So the point is they have to focus on what they good at and focus on what resources and capabilites they already have and they can do it well. The most suitable business level strategy that Pos Indonesia need to perform is differentiation strategy because they have the power of network that none of competitor will have it in the near future. There are also several other strategy that Pos Indonesia can do. •Promotion Strategy
It is important to make people want to try Pos Indonesia service, because actually for someone who already tried the services, they are quite satisfied with the service. In this step, the most important thing to do by Pos Indonesia in developing their brand equity is to promote their re-branding from. Because there are quite people that do not want to use Pos Indonesia services because they still think of the previous reputation. •Focus Strategy
Pos Indonesia need to highlight their most different feature and communicate to the customer and put that into their brand positioning and tagline. At this time, Pos Indonesia try to combine cost leadership strategy (Cheap) with differentiation strategy (wide network and fast time delivery) but with unprepared infrastructure and that is the thing that broken their brand. •Product Focus
Pos Indonesia has many product with almost the same in services. It will make customer confused in which kind of product will beneficial to them. In order to cut the promotion budget and make it efficient, merge some product will be best for Pos Indonesia.
Pos Indonesia is a big state-owned company that already serve people in Indonesia for delivery service industry for a long time. Their infrastrure should have made them the biggest CSI in Indonesia. But the delayed in keeping up with industry change made them lose from their competitors. But is not the end of their business. They can still turnaround their business catch up with other competitors by redesigning their business strategy and also rebranding.
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Falah, Dendra and friends. 2013. Summary of Brand Audit Pos Indonesia – Branding and Communication Management Class.
CSI – Based on Size
CSI – Based on Price
CSI – Based on Speed
First Consideration in choosing CSI Services
Expected vs Actual Service Quality of Pos Indonesia CSI