Sindikat 45C2Elinda (29111017)Kenny (29111032)Dito (29111060)

Adit (291111136)Yandi (29111144)

INTERNATIONAL EQUITY PLACEMENT

STRATEGIC ALLIANCE

Case Study : SEMEN GRESIK

SEMEN GRESIK

Inaugurated on 1957

In 1991 listed in Stock Exchange with the composition: Government 73% and Public 27%

Semen Gresik was State-Owned Enterprise Cement Company

The capacity was 18.2 million metric

tons of cement

Semen Gresik

Semen Padang

Semen Tonasa

VISION AND MISSION

Vision“To become the foremost cement company in South East Asia”

Mission To produce and trade cement and other relevant products with an

orientation on customer satisfaction by applying environmentally - friendly technology.

To create a corporate management meeting international standards by upholding the business ethics, solidarity and to take proactive, efficient and innovative actions in performing the works.

To have competitiveness in domestic and international cement markets.

To empower and maintain synergy among strategic business units to improve added value in a sustainable manner.

To have a commitment to the improvement of the welfare of the stakeholders, especially shareholders, employees and the surrounding community. Semen Gresik

MILESTONES OF SHARES IN SEMEN GRESIK

Year Government Share

Public Share

Cemex Blue Valley Holdings PTE Ltd

1991 73% 27%

1995 65% 35%

1998 51% 35% 14%

1999 51% 23,5% 25.5%

2006 51.01% 24,09% 24,90%

CEMEX

Founded in 1906 with opening of Cementos Hidalgo and in 1920 opening Cementos Portland Monterray and then merged in 1931 become Cementos Mexicanos, now CEMEX

Cemex is global building materials company that provides quality products and reliable service to customers and communities through America, Europe, Africa, the Middle East and Asia.

The company produce, distribute, and sell cement, ready-mix concrete, aggregates and related building material in more than 50 countries, and maintain trade relationship in approximately 102 nations.

CONDITION IN 2011

IDENTIFICATION PROBLEM

What is the opportunities and the outcome of the International Strategy between Cemex and Semen Gresik

The failure of strategic alliance between Cemex and Semen Gresik

PEST ANALYSIS

Politic• Liberation on cement

market in 1999• Government want to

privatization SOE

Economic• Emerging Cement

Models (decrease of demand but projected to high)

Social• Majority of projects

use cement

Technology• The invention of

cement fabrication/cement mass production technology

CORE COMPETENCY

Cement Production / Various product & category

SWOT ANALYSIS

SEMEN GRESIK

Strength•Profitable – market share 45%

•Marketing & distribution capability covered all over Indonesia

Weakness

Opportunities•The emerging cement market

•New technology in concrete products

Threat•New rivals

CEMEX

Strength•Global reach•Good Financial condition Weakness

Opportunities•The emerging cement market

•New technology in concrete products

Threat•New rivals

BUSINESS-LEVEL STRATEGIES

Cost Leadership Strategy

Production Facilities

Marketing and Distribution Coverage

Differentiation Strategy

New product of concrete

ANALYSIS

Strategic Competitive Outcomes

Management Problems and Risk

Use Core Competencies

Explore Resources and Capabilities

Identify International Opportunities

Opportunity

and

Outcomes of

Internationa

l Strategy

IDENTIFY INTERNATIONAL OPPORTUNITIES

Increasing Market Share

Increasing Market Size

Economies of Scale

Learning New Technology

EXPLORE RESOURCES AND CAPABILITY

International Corporate-Level Strategy is using Global Strategy because Cemex bring their SOP in both management and production to Semen Gresik.

MODES OF ENTRY

The international strategies is using the strategic Alliances , where Cemex and Semen Gresik shared cost, shared resources, and share risk

MANAGEMENT PROBLEMS AND RISK

Political

Opposed by Management, Employee, and Local Government

The government did not fulfill their promise

STRATEGIC COMPETITIVENESS OUTCOMES

Better Performance

Commitment

Trust

Human Resources

Organizational Arrangement

Management Control System

CONCLUSION

There are not transparent situation and the difficulties in the alliance’s stakeholder that induced the lack of successfulness in the alliances.

The transparency variable was influenced by share price.

The share price is also influenced the atmosphere of trust and commitment in the alliance.

The macroeconomic condition was in the abyss of Asian Economic Crisis., had influenced negatively to the valuation of Semen Gresik.

CONCLUSION

There are unresolved problem of the ownership. Ownership variable had played a role of influencing the environment of trust and commitment in the alliance.

LESSON LEARN

Both partners must have mutual trust between each other and also their stakeholders in order to achieve a successful strategic alliance.

Transparency also become a primary concern when a company decide to have a strategic alliance especially with overseas companies because its highly depended to their stake holders.

Stake holders’ supports in both parties are the main issue whenever a company decides to do a strategic alliance strategy.

The opposition of the stakeholders in the alliance is influence by number of factors which are the job security, transparency, and share price

WHAT MODES OF ENTRY ?

Strategic Alliance

Equity Placement

Cemex buy government shares of Semen Gresik

WHAT WERE STRATEGIC COMPETITIVENESS

OUTCOMES?

Better Performance

Commitment

Trust

Human Resources

Organizational Arrangement

Management Control System

Innovation

WHAT WERE THE INTERNATIONAL OPPORTUNITIES FOR FOREIGN

PARTNER

Opportunities

The emerging cement market

Good base of competence in cement production

Bigger market size, by open a new market in Indonesia.

WHAT ARE THE RISK FACED BY CEMEX?

Opposed by Management, Employee, and Local Government

The government did not fulfill their promise

WHAT ARE THE COMPLEMENTARY BETWEEN THE PARTNERS

Cemex posses

The technology of new product of cement

Good cash flow

Have high performance concrete product

Semen Gresik posses

the production facilities with big capacity

Highest market share of cement in Indonesia

Biggest marketing and distribution channel

HOW DO YOU DETERMINE THE SELLING PRICE?

The share price is undervalue.

US$ 1,38 is 100% premium price compare of market price US$ 0,81

Because of volatility in currency

WHO ARE THE STAKEHOLDER, AND WHAT ARE THEIR ASPIRATION?

Employees against the alliance because there is no employment securities after the alliance formed (mass lay-off issue in Semen Padang)

Local Government against the alliance because of emotional bond between locals and Semen Gresik

Society against the alliance because a worries that the company will entirely become foreign companies (Nationalism issue)

Management against the alliance because of the possibility of losing control of the company

WHAT DID GOVERNMENT DO TO SUPPORT IEPSA

Liberalization of the cement market in 1999

Support the IMF recommendation about SOE’s privatization

Full support from the house of representatives

Promising Cemex to increase their ownership up to 51% within three year following the decrease of their initial ownership from 35% to 14%

Have Cemex to posses four directors in the board of directors.

WHAT ARE THE RULE OF TRUST IN THE IEPSA?

Trust have a very important role in IEPSA

Distrust between Cemex and Employee of Semen Gresik has created a deteriorating situation that concluded to employee refusal

Distrust between Cemex and Society regarding the share price has created the society to believe that the transaction was full of uncertainty. Thus, the transaction was categorized as not transparent

HOW DO YOU RATE THE STATE OF SUCCESSFULNESS?

Little Success because only the knowledge sharing that applied in the IEPSA during 7 years of alliance between Cemex and Semen Gresik

ARE YOU WILLING TO BUY THE SHARE OR INVEST IN THE SOE?

Yes, if

The Government as the owner of SOE keep their promises that come up at initial phase Ownership portion

The Government ensure that the alliance or investment are fully supported by every stake holders Employee

Management

Society