MM5005 Business Economics

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Haidir Afesina Hendra Winata Mita Listyatri Andek Prabowo Aprian Eka Rahadi Chairunnisa Mirhelina Franciscus Xaverius Kresna Paska Agung Indri Pramantyo

Case - 17 MUSTIKA RATU

NAVIGATING TROUGH SOCIAL & ECONOMIC CRISIS

Company Profile

Mooryati Soedibyo

1978

Jamus & cosmetics

International success with well managed marketing and distribution

Local Success

Middle East

Case Description
In mid 1998 Asian financial crisis devastated Indonesias economy. The crisis created lots of unemployment and bancrupcity Between Dec 1996 May 1998, exchange rate RP vs USD went from 2,382 > 10,000 (exhibit 2) Inflation Jakarta Stock Market lost 95 per cent of its value between its height of 1997 & May 1998

Problem
Expiration of plastic supply contract Cosmetic packaging is using plastic Avoid significant decline in operating margins raising prices up to 40% Any saving cost would come at the expense of quality reducing quality of product is risky Yoges Dixit (Managing Director of Mustika Ratu) reflected: leverage core competencies or develop new capabilities? Should Mustika Ratu focus on domestic market or speed up international expansion (Perhaps 5 year plan for international expansion deserved closer attention)?

Product Lines (Exhibit 6)

1,800> 720-1,800 240 - 720 35-240
Income(USD)/month

<35

A B C D E

A : Other Brand imported (YSL,....) B: Biocell,.... Other Imported(Max Factor) C: Moors Collection,...., Other imported (Revion) D: Mustika Puteri , ... E :Kenanga cosmetic

Domestic Analysis
During the crisis, lots of imported brands are left by the customer Mustika Ratu launched their products for any level (exhibit 6, B, C, D) in order to fill the gap left by the import brand at medium to high level Mustika Ratu products have different product for different segment Naturally, customer will turn to local product to save their cost, however find the one with high quality

Internationl Analysis
For international market, they keep expanding especially in Malaysia (contributing 70% of total revenues internationally) Middle east has a very huge promising market (Moslem country) with halal product as a must Mustika ratu able to get international certified license along with their halal natural product as their differentiation

Categories of Investment
Mustika Ratu invest their money during the crisis by innovating their product. The strategy are: Output Expansion to Accommodate Demand Increases Output Expansion for New Products

Our Conclusion
1. Strengthen their domestic market share by investing in inovative product lines 2. Well manage distribution and marketing strategy to both of local and international market 3. Good forecasting for international market (e.g Malaysia)