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Indonesia
Indonesia
Indonesia general infos:
- 17'000 islands, strategically located (Malacca;passage to the south chinese sea
- Indonesia before 1947 - dindt had to thinfor themselves - colonies of empires
- South asians largest eonomy
- 4th most popultaed country after: CN, IN, USA
- Middle income country (MIC) / Newly industrialized (NIC)
- Member of the G20 / Founding member of ASEAN (10 members) / OECD partner status (Organization for Economic Co-operation and development)
- 17th largest economal country by nominal GDP
- 7th largest in terms of GDP (PPP) - 70% genertaed locally
- 85% is muslim
- 127 swiss companys in indornesia (ABB, Nestle, Schindler)
- China/Japan invest in indonesia - developing countrys need this money from developed countrys - balance is important and not geting too depend
Young democracy is forming:
1945/47: Declare independence after 5 centuries of suppresssion with the help of the United Nations /first constitution - was never independent before (trough colonys: Portuguese/Dutch/British)
1949-1966: "Guided Democracy" but with an authoritarian regime
1967-1998: Authoritarian regime focuses on establising/stabilize the economc system
1997-1998: AFC
1998-1999: New democratic regime
2004-2014: Economic liberalization reforms, intrnational trade, FDI, social welfare and cohesion
2014-2024: Corruprion erradication, promoting FDI, public services reform, poverty reduction
Red Tape was hindering foreign companys:
Red Tape: Excessive bureaucracy and complicated, time-consuming administrative procedures that hinders progress or efficiency for foreing companys
Indonesia business environment - Global ambitions / National development goals:
Global ambitions:
- Become 5th largest economy by 2050 /
- Become oe of the regions top innovation hubs (Drehscheibe)
- Develop geo-political soft powers (FDI/Trade/diplomacy)
National development goals:
- Economic resilience (GDP growth by 5%)
- global, regional and market liberalization and fair competition (Erradicate corruption)
- Value add trough innovation and productivity
- Climate change and environment protection
- poverty eradication, human rights and social integration, education and public welfar
- improve/build infeasrtucture (Fast trains, aiports subway) / improve private sector
Challenges and current issues: (PESTEL)
Political/Legal: Liberalization, corruption, governance structures, relocation of the capital
Economic: Declining FDI, inflation, unemplyment
Social: Young work force, youth unemployment 16%, human rights (Chid marriage)
Technological; National innovation strategy
Ecological: Extreme weatner, waste-management, pollution
Indonesians National Competitive Advantage:
- Theory of competitive advantage of nations (CAN) - The CAN theory argues that competitiveness depends not only on company factors, but also on conditions in the home country
Demand conditions: Home-market relative size; domestic buyers needs - More demand of domestic consumers = higher pressure to firms to innovate
Examples of Industrys: German Cars, French Wine, Swiss Watches, British Whiskey
Factor conditions: Availability, quality, relative prices of inputs (labor, materials) -
Basic factors: Natural recources, geographic location, climate
Advanced factors: Communication, technology, education
Nations succeed in industries which they are good at creatinf and upgrading
Related/supporting industries: Proximity of suppliers, end users, complementary industries (Zulieferer)
Key concept = Clusters; when local industries are mor competitive, firms benefits (Exaples: Silicon Valley)
Firm Strategy, structure and rivalry: Different management styles and organizations, degree of local rivalry
Intense domestic rivalry improves the wordlwirde competitiveness of domestic firms (For example: Italian Shoe Industry)
Mediator of the Diamond Modell: Government (should act as catalyst, challenger)
direct support: through subsidies, temporary proteciotn
indirect support: Favourable economic conditions
Is the country a production market, a consumption market or both?
Porter Diamond Modell Conclusion:
- The Home Country
- Micro level: Important role in achieving competitive adv. of companies
- Macro level: acts as catalyst (stimulates or accelerates change or development)
- Countries should exporting products where ALL 4 components of the modell are favorable, and importing the non favorable components
- Production activities disperesed to countries where they can performe efficiently
- Companies should invest financial resources in first mover adventages
- Free Trade: Best interest of the home country (maybe not for zhe firms)
Summary Indonesians Competitive National Advantage:
F1 Factor Contitions: Natural Recources, young demographic, strategic location, welcoming culture, diplomatic wolrd stance
F2 Demand Conditions: Classified as newyl-industrielized (NIC), Middle-Income (MIC)
F3 Related and Supporting industries: Agricluture, Automotive, Mining, Telecom and Transportation in development
F4 Firm Strategy, Structure and Rivalry: Stable economy (5% growth since 2000) Issues with corruption, protectionism and governemt red tape hinder prgress towards open economy/fair competition,human rights issues
M1+2 Government and Chance: Basic regulatory structures, infrasturcture and service in place but sitll lacking in efficieny, global competitiveness
Global Trends in the macro environment and how do they emerge?
Global (Macro) Mega Trends:
- Duration: Megatrends have a duration of at least several decades
- Omnipresence: Megatrends show effect in all areas of society (Economy, society politics etc)
- Globality: Globally spreaded sooner or later
- Complexity: Multi layered and multi dimensional
Top 5 global megatrends:
- Rapid Urbanization
- Climate change
- Shift in global economy power
- demographic/social change
- Technoligical breacktroughs
How do they emerge?
- Long term development wih great relevance in all areas
Megatrends play a fundamental role in risk manag. and planing, they reshape entire societys
Local Trends:
Local Trends in contrast, are specific to individual countrys (ex: protectioicm, red-tape,corruprion)
Differences between Trends and Shocks:
Trends: Predictable; They can be estimated and therefore included in strategies and development plans for the medium-term
Shocks: Unexpected; Risk of potential disruption or destruction, cant be planed but prevented trough recovery plans, rish sharing diversification startegies
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Flashcards
Indonesia general infos:
- 17'000 islands, strategically located (Malacca;passage to the south chinese sea
- Indonesia before 1947 - dindt had to thinfor themselves - colonies of empires
- South asians largest eonomy
- 4th most popultaed country after: CN, IN, USA
- Middle income country (MIC) / Newly industrialized (NIC)
- Member of the G20 / Founding member of ASEAN (10 members) / OECD partner status (Organization for Economic Co-operation and development)
- 17th largest economal country by nominal GDP
- 7th largest in terms of GDP (PPP) - 70% genertaed locally
- 85% is muslim
- 127 swiss companys in indornesia (ABB, Nestle, Schindler)
- China/Japan invest in indonesia - developing countrys need this money from developed countrys - balance is important and not geting too depend
Young democracy is forming:
1945/47: Declare independence after 5 centuries of suppresssion with the help of the United Nations /first constitution - was never independent before (trough colonys: Portuguese/Dutch/British)
1949-1966: "Guided Democracy" but with an authoritarian regime
1967-1998: Authoritarian regime focuses on establising/stabilize the economc system
1997-1998: AFC
1998-1999: New democratic regime
2004-2014: Economic liberalization reforms, intrnational trade, FDI, social welfare and cohesion
2014-2024: Corruprion erradication, promoting FDI, public services reform, poverty reduction
Red Tape was hindering foreign companys:
Red Tape: Excessive bureaucracy and complicated, time-consuming administrative procedures that hinders progress or efficiency for foreing companys
Indonesia business environment - Global ambitions / National development goals:
Global ambitions:
- Become 5th largest economy by 2050 /
- Become oe of the regions top innovation hubs (Drehscheibe)
- Develop geo-political soft powers (FDI/Trade/diplomacy)
National development goals:
- Economic resilience (GDP growth by 5%)
- global, regional and market liberalization and fair competition (Erradicate corruption)
- Value add trough innovation and productivity
- Climate change and environment protection
- poverty eradication, human rights and social integration, education and public welfar
- improve/build infeasrtucture (Fast trains, aiports subway) / improve private sector
Challenges and current issues: (PESTEL)
Political/Legal: Liberalization, corruption, governance structures, relocation of the capital
Economic: Declining FDI, inflation, unemplyment
Social: Young work force, youth unemployment 16%, human rights (Chid marriage)
Technological; National innovation strategy
Ecological: Extreme weatner, waste-management, pollution
Indonesians National Competitive Advantage:
- Theory of competitive advantage of nations (CAN) - The CAN theory argues that competitiveness depends not only on company factors, but also on conditions in the home country
Demand conditions: Home-market relative size; domestic buyers needs - More demand of domestic consumers = higher pressure to firms to innovate
Examples of Industrys: German Cars, French Wine, Swiss Watches, British Whiskey
Factor conditions: Availability, quality, relative prices of inputs (labor, materials) -
Basic factors: Natural recources, geographic location, climate
Advanced factors: Communication, technology, education
Nations succeed in industries which they are good at creatinf and upgrading
Related/supporting industries: Proximity of suppliers, end users, complementary industries (Zulieferer)
Key concept = Clusters; when local industries are mor competitive, firms benefits (Exaples: Silicon Valley)
Firm Strategy, structure and rivalry: Different management styles and organizations, degree of local rivalry
Intense domestic rivalry improves the wordlwirde competitiveness of domestic firms (For example: Italian Shoe Industry)
Mediator of the Diamond Modell: Government (should act as catalyst, challenger)
direct support: through subsidies, temporary proteciotn
indirect support: Favourable economic conditions
Is the country a production market, a consumption market or both?
Porter Diamond Modell Conclusion:
- The Home Country
- Micro level: Important role in achieving competitive adv. of companies
- Macro level: acts as catalyst (stimulates or accelerates change or development)
- Countries should exporting products where ALL 4 components of the modell are favorable, and importing the non favorable components
- Production activities disperesed to countries where they can performe efficiently
- Companies should invest financial resources in first mover adventages
- Free Trade: Best interest of the home country (maybe not for zhe firms)
Summary Indonesians Competitive National Advantage:
F1 Factor Contitions: Natural Recources, young demographic, strategic location, welcoming culture, diplomatic wolrd stance
F2 Demand Conditions: Classified as newyl-industrielized (NIC), Middle-Income (MIC)
F3 Related and Supporting industries: Agricluture, Automotive, Mining, Telecom and Transportation in development
F4 Firm Strategy, Structure and Rivalry: Stable economy (5% growth since 2000) Issues with corruption, protectionism and governemt red tape hinder prgress towards open economy/fair competition,human rights issues
M1+2 Government and Chance: Basic regulatory structures, infrasturcture and service in place but sitll lacking in efficieny, global competitiveness
Global Trends in the macro environment and how do they emerge?
Global (Macro) Mega Trends:
- Duration: Megatrends have a duration of at least several decades
- Omnipresence: Megatrends show effect in all areas of society (Economy, society politics etc)
- Globality: Globally spreaded sooner or later
- Complexity: Multi layered and multi dimensional
Top 5 global megatrends:
- Rapid Urbanization
- Climate change
- Shift in global economy power
- demographic/social change
- Technoligical breacktroughs
How do they emerge?
- Long term development wih great relevance in all areas
Megatrends play a fundamental role in risk manag. and planing, they reshape entire societys
Local Trends:
Local Trends in contrast, are specific to individual countrys (ex: protectioicm, red-tape,corruprion)
Differences between Trends and Shocks:
Trends: Predictable; They can be estimated and therefore included in strategies and development plans for the medium-term
Shocks: Unexpected; Risk of potential disruption or destruction, cant be planed but prevented trough recovery plans, rish sharing diversification startegies
