Rodamas Group: Designing Strategies in Erging Economies
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Indonesia is a vast archipelago with a population of around 240 million, and has, over the years, experienced significant growth. Local partners were essential to manage the appropriate connections in a country that was rapidly developing but which still suffered from weak infrastructure, law enforcement, and rampant corruption, making every aspect of operations, including obtaining permits, buying land, hiring personnel, procuring inputs and distributing products, a challenge. The cultural diversity and geography for example, with hundreds of languages and islands, made it hard to distribute products and effectively market them. The low disposable income compared with the large population meant that there were…show more content… His son, Tan junior, continued this attitude, which is ingrained in the company culture.
• The Asian Crisis also brought down Suharto and he was replaced with a new regime with anti‐corruption and anti‐Suharto overtones. • In April 2007, for example, a new presidential regulation was passed that allowed 100 per cent foreign ownership in most sectors of the economy except public infrastructure, and the government actively promoted foreign investment, which had fallen to much lower levels than before the Asian Crisis. Some foreign companies already operated without a partner.
Under these changing local and global conditions, what would be the role of Rodamas?
• The company’s capabilities would allow it to produce simple products which could serve the indonesian market • Rodamas did not benefit from knowledge transfer, as technology was proprietary and owned by its Japanese partners. To start for himself in an area that was low‐tech and relatively easy, Tan was toying with the idea of entering the property sector.
• The other option was to move into labor‐intensive manufacturing • Internationalization via foreign direct investment was also a long shot. The company lacked the necessary human resources to establish a base in foreign soil and compete successfully, but on the other hand, the economic crisis worldwide did offer opportunities otherwise not available.