Ford is considering entering the Indonesian automobile market. Indonesia has a population of 240 million people and average annual GDP growth of 6%. The automobile market is growing rapidly, dominated by Japanese brands. Ford would target the growing affluent class and introduce popular models like the Explorer, Flex, Ranger and Escape initially. Key competitors have large shares and are investing heavily in production facilities. Television is the dominant advertising medium currently, though mobile use is growing rapidly. Challenges include developing local supply chain and distribution networks. Ford recommends a regional production strategy to serve the large ASEAN market and expanding dealerships to accommodate sales growth.

1. Ford Motor Company
Indonesia Entry Strategy
Eric Chan
Naveen Cheerath
Dandan Chen
Leslie Forte
Lance Kim
Wenfeng Tang
Renzhong Yu
Lele Zheng

2. Agenda
Indonesia Overview
This is an example text. Go ahead and replace it
Conclusion
Competitor Analysis
Supply Chain
Questions6
5
4
3
2
1
Marketing

3. Overview on Indonesia

4. ASEAN
• A geo-political and economic organization – 10
nations
– 3% of total land area of Earth
– A population of approximately 600 million, 8.8% of the
world’s population
– As a single entity, the 8th largest economy in the world
• Average GDP growth rate 2007- 2012: 5.1%
• GDP per capita: $5,807
Data source: http://www.dfat.gov.au/geo/fs/asean.pdf

5. Demographic
• Indonesia is the doorway to Southeast Asia’s
650 million inhabitants
• Population: 240 million; Around 58%
population live in Java
• GDP: 846.8 billion
• Average economic growth rate: 6%
• Average per capita income US$3,500
• Encouraging FDI policies
• Car ownership: 45 vehicles per 1,000 people

6. Indonesia market & GDP
-25.00%
-15.00%
-5.00%
5.00%
15.00%
25.00%
35.00%
45.00%
55.00%
2008 2009 2010 2011 2012
Market growth rate & GDP growth rate
Car sales growth rate GDP Annual Growth Rate
http://www.indonesia-investments.com/news/todays-headlines/indonesias-car-industry-continues-strong-growth-in-q1-2013/ite
m634
http://www.tradingeconomics.com/indonesia/gdp-growth-annual

7. Macro Economy
• Strong economic expansion
• Record low interest rates
• Auto market has expanded rapidly
• Expect Indonesia to emerge as the largest auto
market in Southeast Asia in 2014
• More interconnected with ASEAN
economy

8. Consideration of model selection
 Affluent class with a disposable
income above $7,500 a month
 6.6% of country’s 240 million
people, possible reach 16.5% in
2020
 Luxury and sports cars are becoming
a more common sight, particularly in
the capital, as Indonesia's elite
grows. It is forecast to jump from
around six million people to 16.6

9. Model selection
 Indonesia's car market is dominated by van or Multi
Purpose Vehicle (MPV)
 A kindly of utilitarian, capacious vehicles – a low-
priced seven-eat multipurpose vehicle
 Demand for light vehicles is expected to grow rapidly.
 Mostly young and techno-savvy, discerning
consumers…who want cars that match with their
gadgets and lifestyles.

10. Current Ford Lineup

11. Model Recommendation
Explorer
Flex Crossover
Ranger
Escape
Lincoln Navigator

12. Competitor Analysis

13. Competitor Analysis
• Japanese brands have about 95% of the market.
• Low- med end vehicles dominate the market-
95%
• Customers have more preference of MPV.
• Indonesia car sales increased by 17.8% in Q1
2013.

14. Big Four
15.9% 14.6% 12.1%
1.2%

15. Favorite Models

16. • Suzuki invested $80 million in expanding
production in Indonesia.
• Toyota invested $20 million in expanding
production in Indonesia.
• Mitsubishi will invest $1.8 billion in five years
in Indonesia.
• Daihatsu plan to invest $24.6 million in
Indonesia.
• Chrysler plan to invest $10 million in
Indonesia.
Competitor News

17. • In Q1 2013, Sales growth of Toyota:
8.4%, Daihatsu: 5.2%, Mitsubishi:
8.2%, Suzuki: 70.4%, Honda: 228.8%
• Benz, BMW, Chevrolet increased
assembling rate to decrease taxes.
• Chevrolet restored its factory in Indonesia
to manufacture Chevrolet Spin to compete
with Toyota Avanza.
Competitor News

18. Marketing

19. “Ford goes further to build great, environmentally sound products, a strong
global business and a better, more humane world. We go further every day by
offering vehicles with innovative technologies, plug-in hybrids and EcoBoost®
engines that combine power and efficiency”
Go Further

20. Traditional Marketing
• 75% marketing budget spent in traditional media
(print, television, etc)

21. #SocialMedia

22. Strategy: to humanize the company
by connecting consumers with Ford
employees and with each other when
possible, providing value in the
process.

23. Ford Dealers in Indonesia
Sumatra - 9
Papua - 5
Bali - 3
Kalimantan - 6
Java – 28
Sulawesi - 3

24. Television accounted for more than 60% of ad
spending, followed by newspapers (34%) and magazines (3%)

25. • Television is the dominant source
of news and entertainment.
– Over 90% of Indonesian households
have a TV set
• Spend about 40% of time watching
television
• Main focal point for social
gatherings
– Main viewing times are in the evening
• Affluent communities have cable
Television

26. http://adage.com/article/adagestat/stat-day-mists-mobile/230750/

27. Mobile Growth
(81.0%) Indonesians now
saying they have a mobile
phone in their household, up
from two-thirds (67%) in 2011
(49.8%) Indonesians now
say they use SMS/text
messages at least once a
week to get news

28. Recommendation
Hitting the television market first will ensure the largest amount of exposure
to consumers because of the high existing amount of television viewers
Television
Waiting and strategically implementing mobile device marketing
campaigns, Ford can effectively target this growing segment over time
Mobile Device
Once online penetration increases, Ford can deploy full forced online
marketing and social media campaigns.
Internet
1
2
3

29. Supply Chain

30. Operation and Supply-Chain
Distribution in partner with
RIMC
Held 100 million Supply-
Chain project in Indonesia
Cars are Imported from Thailand.
Distribution with IndoMobile
Current Operation is managed by
Ford’s ASEAN Region

31. Demand
ASEAN Operation keeps inventory at dealership at a minimum
De
ma
nd
Waitlist is provided for car buyers
and depends on the model, wait
time ranges from 5 days to 6
months
Supply-Chain
Thailand’s Hub Manufacturing
Supply

32. Challenges in Supply-Chain
Indonesia currently lacks infrastructure to support plant operation
and export.
Takes 18 days for to export and 21 days import
(Documentation to port handling)
40% of the roads lack the ability to handle standard 40 ft.
freight trucks (20-25 tons)
Ford lacks a strong local distribution network & partners
Ford’s shift of investment in 1999 still has lingering
effects. A distrust among local dealerships.
Local partnership is not exclusive. IndoMobile also
operates JV with VW, Nissan, Volvo etc.
Demand forecast is grouped with other ASEAN

33. Recommendation
• Regional Development of Production and Supply Chain in ASEAN
Reasons:
1). 2 Billion potential customers and reached $5k-$6k per
capita income level
2). Till 2020, Industry volume 32MM units to 52 MM
units, APA accounts for 46% of global automotive
industry and over 60% of its growth.
3).Align capacity with demand means adding a significant
amount of capacity the next several years
4). One ford plan : produced on global platforms with 80%
parts commonality and gives us the scale
generate profit
5). Elimination or lower tariff barrier
6). Utilize the different advantages in different countries

34. Recommendation
• Expand dealer network in Indonesia to
accommodate sales growth
• Provide the car models that fit for the regional
consumer needs( quality, fuel
efficiency, safety, smart tech)
• Enhance consumer satisfaction through the
3S service concept ( Sales-service-spare
part)
• Cooperate with 3rd party to facilitate the
process

35. Verdict

36. Questions?