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Title Slide : EXPORTING PIZZAS TO INDONESIA

Slide 1 : INTRODUCTION

Product : PACKAGED PIZZAS FOR HOME MEALS

Country : INDONESIA

SALES POINTS : HYPERMARKETS , SUPERMARKETS , MINIMARKETS

EXPORT STRATEGY : JOINT VENTURE WITH LOCAL PARTNER

PROMOTION STRATEGY : ADVERTISING LOCAL SALES FORCE

WORKING CAPITAL FOR BOTH US AND INDONESIA Slide2 : PRODUCT SPECIFICATION

THREE TYPES OF PIZZAS : LARGE , MEDIUM , SMALL SIZE

THREE FLAVORS : ALL MEAT , VEGETARIAN , MIXED

START SALES ON TWO ISLANDS : JAVA BALI

THREE FLAVORS MATCH TASTE ' OF JAVANESE BALINESE

SALES OUTLETS IN MAJOR CITIES JAVA BALI

OTHER TYPES OF PIZZA WILL BE

EXPORTED WHEN PENETRATING OTHER ISLANDS

Slide 3 : GNP /CAPITA GROWTH RATE , EXCHANGE RATE TRENDS

GNP 899 billion (purchasing power parity

GNP 245 .3 billion (official exchange rate

GNP growth rate : 5 .3

GNP /Capita 3 ,700

Currency : Indonesian Rupiah (IDR

Exchange rates : Indonesian rupiahs per US dollar - 9 ,739 .35 (2005 8 ,938 .9 (2004 , 8 ,577 .1 (2003 , 9 ,311 .2 (2002 , 10 ,260 .8 (2001

Slide 4 : SIZE OF MARKET

SIZE OF POPULATION : 250 MILION

20 POPULATION BUYS PACKAGED FOOD : 50 MILLION PEOPLE

THESE 50 MILLION ARE MIDDLE - AND UPPER CLASS SEGEMENT OF POPULATION

CONSUMPTION OF THIS 20 IS RESPONSIBLE FOR HALF OF ECONOMIC GROWTH

ECONOMIC RECOVERY AND STABLE DEMOCRACY WILL DOUBLE THIS SEGMENT IN NEXT 10 YEARS

COMPARISON WITH INSTANT NOODLE MARKET SERVING ALL MARKET SEGMENTS

MARKET LEADER INSTANT NOODLE COMPANY IN INDONESIA ( INDOFOOD PRODUCES 800 .000 NOODLE PACKS /HOUR THEY ARE 24 HOURS COMPANY Slide 5 : MARKET SCREENING

PACKAGED FOOD STILL LAGGING BEHIND UNPACKAGED FOOD

FURTHER GROWTH OF PACKAGED FOOD STILL IMMENSE IN 2004-2009

PURCHASING POWER OF CONSUMERS WILL RISE IN THE NEXT FIVE YEARS

MODERN RETAIL OUTLETS (HYPERMARTS MINIMARTS ) WILL EXPAND RAPIDLY

CONSUMERS WILL HAVE EASIER ACCESS TO WIDER RANGE OF PRODUCTS

VOLUME OF GROWTH PACKAGED FOOD WILL RISE DRAMATICALLY IN 5 YEARS

Slide 6 : BASIC NEEDS POTENTIAL

MANY OPPORTUNITIES IN THE FOOD AND EDUCATION MARKETS

FOOD MARKET IS SLOWLY DOMINATED BY WESTERN PRODUCTS LIKE MCDONALDS , KFC A W , PIZZA HUT

FAST GROWING OF HOUSEHOLDS OWNING OVENS AND MICROWAVES

TRAFFIC CONGESTION PROBLEMS MAKES FAST HOME-MADE MEALS VERY INTERESTING

WESTERN PRODUCTS IN GENERAL AND WESTERN FOOD PRODUCTS IN PARTICULAR SEEN AS STATUS COMMODITIES

Slide 7 : IMPORT RESTRICTIONS

NO RELEVANT IMPORT RESTRICTIONS

DAIRY /ANIMAL PRODUCTS NOT PERMITTED

MEAT AND POULTRY NEED SPECIAL PERMISSION

WE NEED SPECIAL PERMISSION FROM INDONESIAN MINISTRY OF HEALTH DUE TO PROHIBITION PORK CONTENT

LOCAL PARTNER RESPONSIBLE FOR IMPORTING AND DISTRIBUTION

LOCAL PARTNER RESPONSIBLE FOR PUTTING LABELS ON BOXES MENTIONING `NO PORK CONTENT

Slide 8 : PRIZE CONTROLS

NO PRICE CONTROLS FOR PACKAGED PIZZA

PRICES DETERMINED BY COST /BENEFIT ANALYSIS

THREE TYPES OF PIZZAS : LARGE , MEDIUM , SMALL SIZE

THREE FLAVORS : ALL MEAT , VEGETARIAN , MIXED

Slide 8 : GOVERNMENT ATTITUDE TOWARD BUYING AMERICAN PRODUCTS

INDONESIAN GOVERNMENT WELCOMES PRODUCTS FROM ABROAD

AMERICAN PRODUCTS CONSIDERED OF `GOOD QUALITY

MARKET LEADERS OF AMERICAN FOOD PRODUCTS ALREADY IN COUNTRY FOR MANY YEARS (MCDONALDS , KFC , A W

AMERICAN INVESTMENT WELCOMED

Slide 9 : PUBLIC ATTITUDE TOWARD BUYING AMERICAN PRODUCTS

STRONG PRESENCE OF MANY AMERICAN PRODUCTS

HIGH POPULARITY OF AMERICAN FOOD PRODUCTS LIKE MCDONALDS , KFC , A W PIZZA HUT

AMERICAN FOOD PRODUCTS SEEN AS STATUS ENHANCING PRODUCTS

RISING NUMBER OF URBAN POPULATION SHOPPING IN HYPERMARKETS SUPERMARKETS , AND MINIMARKETS

IMPORTED PRODUCTS PERCEIVED BY PUBLIC AS HIGH QUALITY PRODUCTS COMPARED TO LOCAL MADE PRODUCTS

Slide 10 : COMPETITORS

ALMOST NO COMPETITION DUE TO EXCLUSIVITY PACKAGED PIZZA

CEREALS MORE POPULAR AMONG MIDDLE- AND UPPER-INCOME INDONESIANS IT IS ALSO EASIER TO PREPARE FOR BREAKFAST

HEALTH CONSCIOUSNESS RISING AMONG POPULATION

LOW-SUGAR AND LOW-FAT FOODS BECOMING MORE POPULAR

INDONESIANS WANT ADDED VALUE HEALTHY SUBSTANCES ARE BECOMING MORE IMPORTANT

TOP PERFORMER IN 2004 WAS MEAL REPLACEMENT PRODUCTS WITH ANNUAL GROWTH OF 31 FOLLOWED BY FROZEN PROCESSED FOOD PRODUCTS

ANNUAL VOLUME GROWTH OF FROZEN FOODS IS 20

Slide 11 : SOCIOCULTURAL FACTORS

LARGE COUNTRY WITH MANY ETHNIC GROUPS

LARGEST GROUP CONSIST OF JAVANESE (60

MOST POPULOUS ISLAND : JAVA

MAIN RELIGION (MODERATE ) MUSLIM (90

MOST WEALTHY : CHINESE MINORITY (6-7

ALL WEALTHY INDONESIANS LIVE IN CITIES

Slide 12 ATTITUDES AND BELIEFS

INDONESIA STILL DEVELOPING COUNTRY

PEOPLE BELIEVE IN RELIGION AND TRADITIONAL VALUES

MODERNIZATION IS RAPIDLY SPREADING

URBAN POPULATION MORE MODERN

RURAL POPULATION STILL TRADITIONAL OUTLOOK

AMERICAN YOUTH CULTURE VERY POPULAR

AMERICAN HOLLYWOOD MOVIES ARE MARKET LEADERS

Slide 13 : LANGUAGES

MORE THAN 300 LOCAL LANGUAGES

NATIONAL LANGUAGE IS INDONESIAN (ALSO KNOWN AS MALAY

ALL INDONESIANS SPEAK INDONESIAN /MALAY

ENGLISH SPOKEN BY UPPER CLASS

ENGLISH CONSIDERED MORE IMPORTANT THAN OTHER LANGUAGES (MANDARIN JAPANESE , ETC

Slide 14 : EDUCATION

PUBLIC EDUCATION AVAILABLE FOR ENTIRE POPULATION

QUALITY OF STATE EDUCATION IS POOR

QUALITY OF PRIVATE INSTITUTIONS IS BETTER BUT EXPENSIVE

KNOWLEDGE OF GENERAL POPULATION POOR

INDICATOR : ONLY 10-20 MILLION INDONESIANS USE COMPUTERS AND INTERNET

EDUCATIONAL INSTITUTIONS OFFERING ENGLISH-BASED CURRICULUM BECOMING MORE POPULAR

Slide 15 : EXPORT MARKETING STRATEGY

JOINT VENTURE WITH LOCAL PARTNER

LOCAL PARTNER RESPONSIBLE FOR IMPORT AND DISTRIBUTION

LOCAL PARTNER RESPONSIBLE FOR PERMITS

LOCAL PARTNER RESPONSIBLE FOR LABELS `NO PORK CONTENT

WORKING CAPITAL NEEDED IN US AND INDONESIA

LOCAL PARTNER DETERMINE DISTRIBUTION STRATEGY BASED ON MARKET RESEARCH

STRATEGY WILL BASICALLY BE MARKET PENETRATION

Slide 16 : PROMOTION METHODS

PROMOTION BASED ON VISUAL ADVERTISING : TV , BANNERS , BROCHURES , POSTERS ETC (INDONESIANS DO NOT LIKE TO READ

PROMOTION COST HIGH IN BEGINNING DUE TO UNKNOWN PRODUCT (PACKAGED PIZZA

SALES FORCE WILL BE NEEDED DUE TO IMPORTANCE OF `PERSONAL ' APPROACH IN INDONESIA

TRAINING OF SALES FORCE IMPORTANT

FOOD TESTING ' EVENTS NECESSARY IN VARIOUS SHOPPING MALLS IN BIG CITIES IN JAVA BALI

Slide 17 : CONCLUSION

EXPORTING PACKAGED PIZZAS TO INDONESIA INTERESTING OPPORTUNITY

ALMOST NO COMPETITION

WORKING CAPITAL WILL BE NEEDED

TARGET CONSUMERS : MIDDLE- AND UPPER CLASS

LOCAL PARTNER IMPORTANT FOR PERMITS , IMPORT AND DISTRIBUTION

BREAK EVEN POINT CAN BE REACHED IN SHORT TIME : ONE TO TWO YEAR

Slide 18 RESOURCES

Ball , McCulloch , Frantz , Geringer , Minor "International Business " The Rapid Change of International Business , Chapter 1 , McGraw-Hill Companies , 2005

CIA , World Fact book , 2006 http /www .cia .gov /cia /publications /factbook /geos /id .html

Country briefings Indonesia , 2005 , HYPERLINK "http /www .economist .com " www .economist .com

International portal on food safety , animal plant health , 2005 HYPERLINK "http /www .ipfsaph .org " www .ipfsaph .org

Packaged Food in Indonesia [report] , 2005 , HYPERLINK "http /www .the-infoshop .com " www .the-infoshop .com

NOTES FOR CUSTOMER The above presentation can be copied and pasted to power point slides

The above slides are the `continuing story ' of the previous presentation . In the previous presentation , a lot of information has already been supplied

Additional information

Indonesia is a big country : it consists of more than 13 000 islands and it is the largest archipelago in the world . However , the most populous islands are Java and Bali . Bali is known for its tourist attractions Java is known for its temples . Around 60 of the Indonesian population lives on Java . So , this island must be penetrated first before considering trying to sell in the other islands (Sumatra , Sulawesi Kalimantan , West-Papua . If penetration of Java and Bali is successful penetrating other islands will be easier . However , the taste of the buyers will be different on the other islands . It will be very important to find out the taste of buyers through market research . This will be the responsibility of the local partner

The market size of packaged food is basically the entire population : 250 million people . This is actually the market size of the `competitor instant noodles , which are consumed by all Indonesians . However packaged pizzas will be targeted towards the middle- and upper classes This segment is around 20 or 50 million potential buyers . But keep in mind that 50 of the Indonesian population lives in the big cities : the target markets . So , in reality there are 125 million potential buyers in the medium term : the next ten years . In the long term , the market is still huge because the population will grow to 350 million in 2050 . of which 60 to 70 will live in the cities

The marketing strategy must be adjusted to local conditions . Indonesians don 't like to read , they want to see visually what you have to sell . So advertising must take this very important aspect into consideration . A local sales force will also become important because Indonesians like to be approached in a personal way . But this is not a big problem plenty of potential sales persons available for relatively low wages . Testing the pizzas in malls will also be very important . Indonesians spend their free time in malls

Although the level of education of Indonesians is still low , they don 't need much `education ' to buy pizzas . They either like it or not . It doesn 't really matter whether they are highly educated or not . Moreover Indonesians like to buy Western food products because they are considered status products . Western food products are more expensive So , they want to `show off ' to their peers that they can afford to buy Western foods (Personally I think they like local food more , but they hate to be called provincial for only consuming local dishes which are really very good

Branding is also important . It is not mentioned in the slides , but a good brand name which sticks must be found . This must be done with the local partner . If a professional and reliable local partner is found most of the work can be left to them . However , it is also very important to train the people working for the local partner . That 's why working capital is needed . Not only to make the pizzas in the US , transporting them , promoting them , but also training the sales force . In addition good management systems must also be exported to the local partner . In the future , the pizzas might be made locally with local ingredients . But that depends on the sales and turn over

One final word about strategy . The textbooks are full with interesting concepts about strategy . However , these strategies are predetermined before anything actually happens . In a developing country like Indonesia , strategizing happens while you are doing business . The market forces are far more dynamic than in Western countries . It is very important to adapt constantly to the market dynamics . You can have a good strategic plan at the start , but it will always be outdated when you start the business in Indonesia . Don 't waste time making plans which look good on . Just do what you need to do in the real world and communicate openly and honestly with your partner . This person will determine whether you will fail or succeed ...