CHAPTER 2 BUSINESS PLAN

CHAPTER 2
BUSINESS PLAN
2.1 Executive Summary
Naturalife Greenworld is a firm that was established by the
students and alumni of the school of pharmacy ITB in 2006.
Naturalife Greenworld is established as a company that will focus
on the medicinal plants trading as the supplier with the best
product quality assurance. Naturalife Greenworld has obsession
to be the main supplier of medicinal plants product in the
domestic and international market.
In the first step, Naturalife Greenworld will focus on the
upper stream business as the supplier to the big players who need
medicinal plant. The big players can be either the major industry
players or niche industry players such as PT. Kimia Farma,
PT.Indofarma, PT. Bio Farma and PT. Pharos, Bayer, Bristol Myer
Squibb, Merck, Scan Chemie, Phvizer, Abbot, Aventis, Sandoz
Biochemie, PT. Sidomuncul, PT. Nyonya Meneer, PT. Indotraco
jaya utama, PT. Indofarma, CV. Temu kencono.
Naturalife Greenworld has a wide range networking for
getting its material, from the medicine plants farmer in Banten,
West Java (Lembang, Lido and Subang), Yogyakarta (Klaten),
Central Java (Wonogiri and Tawang Mangu) and also East Java
(Sidoarjo and Malang) to run the function of quality control
especially in handling the pesticide and also the drying of
simplicia and water composition.
7
Naturalife Greenworld products position itself as the the
medicinal plants supplier company which provide high quality
and safe products which in line with the international standards
and customize depends on the requirements and the demand of
the industry.
Naturalife Greenworld product focus is in the form of
simplicia presentation for wild ginger (Zingiber officinale), kumis
kucing (Orthosiphon aristatus), rumput fatimah (Labisia pumila). The
consideration of choosing those plants are because of their
readiness to be harvested, to be dried and to be supplied to the
industries that needs these medicinal plants. Beside that the
planting time also becomes the consideration. Ginger have the
longest planting time of eight to ten months, while rumput fatimah
or kumis kucing have a plantating time of one month to two
months. In conclusion, the planting time of kumis kucing and
rumput fatimah are aimed at supporting the long planting time of
ginger.
Naturalife Greenworld is aiming at having the market
share of ginger for 1% of the total market of ginger or 50 tons per
year or as big as IDR 200 millions from the total market of 5000
tons or as big as IDR 2 trillions. This is actually for the initial
strategy, because Naturalife Greenworld believes that in the
following year the company can increase the market share to 520% for ginger. For kumis kucing, since there are no players in this
product, Naturalife Greenworld is optimistic to lead the market
share by 70% of 20 tons which is 14 tons or equal to IDR
996.000.000 per year. Lastly for rumput fatimah we are aiming at
supplying 630 kilograms for every two months. Specifically for
8
rumput Fatimah, Naturalife Greenworld is the pioneer of playing in
rumput fatimah market.
Naturalife Greenworld businesses is a fast growing
business, according to the financial analysis, the business of
medicinal plant that will be run by Naturalife Greenworld is very
feasible based on the normal case, since the Payback Period is 15
months and25 days, NPV is bigger than “0” about IDR 314.649.416
and IRR is is 155 percent.
In conclusion the business are very prospective since the
habit of medicinal consumption had changed to back to natures
trend. Beside the empty market that are not yet fulfilled which
vary in different business core ensure the high rate of demand in
medicinal plants in Indonesia.
2.2 Company Profile
2.2.1 Business Profile
Naturalife Greenworld is a firm that was established by the
students and alumni of the school of pharmacy ITB together with
SBM-ITB student in 2006. Naturalife Greenworld is established as
a company that will focus on the medicinal plants trading as the
supplier with the best product quality assurance.
Naturalife Greenworld will cooperate with the potentially
credible farmers of medicinal plant products such as ginger, kumis
kucing and rumput fatimah.
9
Naturalife Greenworld has obsession to be the main
supplier of medicinal plants product in the domestic and
international market.
Naturalife Greenworld has significant resources either in
competency, network or in human capital such as pharmacy
competency, laboratories network, financial practitioners, UGMITB consultant and direct network to medicinal plants farmer
network.
2.2.2 Company Value
This part will describe Naturalife Greenworld company value
which consisting of the company vision, company mission,
company logo, company motto and the company core value.
2.2.2.1 Company Vision
To be the best Indonesian medicinal plants/herbs company having
international standard qualification operating on completely
integrated from upstream to downstream industry.
2.2.2.2 Company Mission
1. Controlling
the best
supply of medicinal plants in
Indonesia.
2. Conquering medicinal plant market in In Indonesia.
3. Supplying the international need of medicinal plants.
10
4. Tight controlling in quality and quantity assurance of the
medicinal plants.
5. Having a well prepared and execution to achieve the
company vision.
2.2.2.3 Company Logo
The figure below is the Naturalife Greenworld logo, which is
designed based on the philosophical basic of the Naturalife
Greenworld company value and represents the whole identity of
the company.
Figure 1: Naturalife Greenworld Logo
Naturalife Greenworld logo consist of three different parts.
The first one in the top is the main company logo which having a
philosophical meaning as follows:
11
1. The green color represents the company value of
the
sustainable
development
of
the
natural
resources on our environment.
2. The green circle represent the greenworld and the
sustainable
development
of
earth
of
which
Naturalife want to achieve.
3. The plants picture represent the the medicinal
plants of which Naturalife focuses on.
The second part is the naturalife greenworld text which
explains the logo on the top. Then the last part is the NLG text is a
logo that will be use for all the Naturalife Greenworld employees
to be put on their chess to make them proud of Naturalife
Greenworld Company.
2.2.2.4 Company Motto
The company motto is “Experience the Harmony of Life”, having the
meaning of bringing people back to the nature and having feel the
harmony of living by using something that the nature always
gives us.
2.2.2.5 Company Core Values
1. Trust
The company should be known as the trusted company,
either externally or internally.
12
2. Knowledge
The company should become the knowledge based
company by always updating knowledge.
3. Work Ethos
The company insists in implementing a discipline and
never give-up culture
4. Leadership
The company should be able to lead the efforts in the best
way to achieve the company vision.
5. Sustainable Development
The
company
actively
involve
in
the
sustainable
development of the nature and the company itself.
2.2.2.6 Keys Success Factors
To be the best Indonesian medicinal plants/herbs company having
international standard qualification operating on completely
integrated from upstream to downstream industry. Naturalife
Greenworld has the following key success factors:
A. External Factors:
1. Definitely targeted markets which always increase
consistently.
2. Best quality of products and services, from both
upperstream process to the downstream process.
3. Realistically competitive price
B. Internal Factors,
1. Focus
2. Discipline
3. High spirit
4. Teamwork
13
2.3 Product Description
Naturalife Greenworld will provide a variety of qualified
medicinal plant products that will enable to the traditional
medicine industries pharmacy industries and to several potential
targeted market. Naturalife Greenworld underlying philosophy in
selecting products is to choose lines of products carrying not only
best quality, competitive prices and product satisfaction to
customers but also high margin of profit for the company.
Naturalife
Greenworld
has
intentionally
conducted
research of the following products. Naturalife Greenworld has
high commitment to offer products that are in line with the
required
standard
of
industry
demand
nationally
or
internationally. All of the product are in a form of dry herbs, which
divided into three kinds of form namely leaves, rhyzomes and
fruits.
Ginger (Zingiber officinalle) is a medicinal plant with an
apparent stem. Ginger is originally from the Asia Pacific and
spreads along China to India (Direktorat Budidaya Tanaman
Sayuran dan Biofarmaka, 2005: 1). The two nations (China and
India) are the first nation using ginger as drink, spices and
traditional medicine (Direktorat Budidaya Tanaman Sayuran dan
Biofarmaka (B), 2005: 4). The characteristics of Ginger are they
need: a high rate of rain between 1.500-3000 mm/year, an open air
to get sunshines especially between 2,5 until 7 months old, a
crumble land. Moreover, they live in tropic or subtropic area
between 0-1.000 m above the sea level (Direktorat Budidaya
14
Tanaman Sayuran dan Biofarmaka (B), 2005: 7). Ginger picture can
be seen below.
Figure 2: Jahe Plantation in Banten
Rumput fatimah (Labisia pumilla), has been used by many
generations of the Malaysian and Indonesian women to induce
and facilitate childbirth as well as a post-partum medicine. Three
varieties of Labisia pumila had been identified and found in
Malaysia, they are Labisia alata, Labisia pumila and Labisia lanceolata.
It is imperative to differentiate the three varieties in terms of their
physical and chemical characteristics as well as biological activity,
in order to determine the proper plant material for use, hence
producing quality herbal medicines with proven safety and
efficacy. It is a fast growing plants, it can be planted last than one
month to two months maximum3.
3
http://www.imr.gov.my/org/hmrc_r2.htm
15
In the Figure 3 below, it shows the rumput fatimah picture:
Figure 3: Rumput Fatimah Plantation between Corn Plantation in Lido,
West Java
There is presently a great local market demand for rumput
fatimah especially as afterbirth tonics, however, a paucity exists in
technical
information
on
plant
identification,
propagation
techniques, agronomy and sivicultural aspects according to
Jaganath and Ng on the year 20004.
Kumis kucing (Orthosipan aristatus) is a medicinal plant in a
form of straight wet branch. This plants is well known with
several names such as kidney tea in England, giri-giri marah in
Sumatera, remujung in Central Java and East java and songot
koneng in Madura. Kumis kucing was originally from tropical
Africa and then spread out to Asia and Australia. The wet or dry
leaves of kumis kucing is used as a material of medicines. In
Indonesia the dry leaves (simplisia) is used commonly for kidney
4
http://www.imr.gov.my/org/hmrc_r2.htm
16
problems (diuretic) meanwhile in India it is used to heal
rheumatism5.
The picture of kumis kucing can be seen in Figure 4 below:
Figure 4: Kumis Kucing Plantation in Lido, West Java
The peoples in South and South East Asia are commonly
used kumis kucing as traditional medicines to heal several peoples
problems including rheumatism, masuk angin and constipation.
Beside that kumis kucing could also be used for therapy kidneys
inflamed, kidneys stone, kencing manis, albuminuria, and
syphilis6.
Currently the majority of these products are only available
to customers through wholesale vendors such as Cash and Carry
5
http://www.ict4pr.org/files/warintek/Teknologi%20Tepat%20Guna/budidaya%
20pertanian/obat/kumis_kucing.pdf
6
http://www.ict4pr.org/files/warintek/Teknologi%20Tepat%20Guna/budidaya%
20pertanian/obat/kumis_kucing.pdf
17
in retail outlets in a small number and volume; therefore it is the
customer's responsibility to acquire these products by their own
means. As the same as rumput fatimah, kumis kucing is also a fast
growing herbs approximately from three weeks to one months if it
is plant in a right procedure.
2.3.1 Product Distribution
2.3.1.1 Current Distribution Schemes
Figure 5 shows the current distribution processes as it is
researched by the Department of Agriculture of Indonesia in
several medicinal plants production area. From the figure can be
identified that the products must pass several stages before it
reach the customers hand. From the farmer the products go to the
assembly trader, inter region trader and ends up in the processing
industries for the industry purpose used. Meanwhile for the
internal consumption, it must go first to the district trader in the
kecamatan or kabupaten wholesaler. In this graphic either farmer,
assembly trader or inter region trader can make their own way of
doing export through the exportir channel.
The figure in the next page shows the common product
distribution which is made by the Department of Agriculture of
Indonesia:
18
Farmer
4
1
Assembly Trader
Inter region trader
Kabupaten District Trader
2
3
5
Processing Industries
Internal Consumption
Exportir/
Importir
Figure 5: Biopharmaca or Medicinal Plant Market Current Distribution Schemes
(Source: Department of Agriculture, Indonesia, 2002)
2.3.1.2 Naturalife Greenworld Distribution Schemes
From the Figure 6 in the next page clearly explains that Naturalife
Greenworld product distribution cuts several stages in the market,
since Naturalife Greenworld does an effective process to the
product received from the farmer by drying the product and
doing toxicity process. The process makes the product value
increase so that Naturalife Greenworld also can earn more profit
margin.
19
Farmer
1
Naturalife GreenWorld.co
Quality
Assurance
Export
3
Inventory
Processing
4
2
Local Market
Global Market
Figure 6: Naturalife Greenworld Distribution Schemes
2.3.2 Quality Assurance
In the beginning of Naturalife business, the company is aiming at
giving the best quality products to the customers. This means the
products which are going to be supplied must fulfill the standard
quality of company. To fulfill the industry standard the company
will set up the internal standard we are going to have internal
standard guidance of standardizations as Naturalife greenworld
quality assurance. The benefit of having standardization is to
guarantee the uniformity of the product, the consistency and
uniformity including safety, benefit and product quality from
batch to batch (the quantity of measurement in one sample).
20
The point of quality of assurance and the guidance of
standardization are Kadar abu total, Kadar abu tidak larut asam, Kadar
abu larut air, Logam berat (Kadar/Batas), Kelarutan, Kadar sari larut
pelarut tertentu, Cemaran pestisida, Cemaran radioaktif, Kadar air,
Susut pengeringan, Bahan organik asing, Senyawa sintetis, Residu
pelarut organic, Aflatoksin, Cemaran mikroba (ALT, Angka kapang
khamir, Bakteri patogen) (Elfahmi, 2006).
The quality assurance will last for the first 3 years of the
company establishment. After 3 years, Naturalife are aiming at
getting the ISO to be able to get international recognition of the
products quality standards, considering that the dynamic of
business which require a global product quality standards and
minimizing the risk of uncertainty business situation in Indonesia.
2.3.3
Packaging
There is no standard demand for packaging, but there is the wide
range variability on packaging specification depending on the
needs of each buyer. However Naturalife has prepared the
technology of packaging to accomodate the need such as the
vacuum packaging technology.
2.3.4
Competitor Product Analysis
Generally the direct competitors in this business are not many,
there are only two big players that will be the main competitors,
namely Haldin and Emeralda. The rest are individual players
which do not continuously show up.
21
Haldin has various variety of products and captive market
in the USA, it is not amazing because it is a sub company of its
holding company base in the USA. Moreover Haldin itself is not
focusing well on its core products, it is seasonal inter region
trader. Haldin does not process the products until extract products
like Naturalife Greenworld will do.
Emeralindo Hijau Lestari is a trader that located their
company in Bandung, Emeralindo focus itself on ginger products
for the purpose of trade, but it trades ginger in the form rhyzome or
wet form (Direktorat Tanaman Sayuran, Hias dan Aneka
Tanaman, 2002: 29) or without any further processing (drying) like
Naturalife Greenworld will do.
2.4
Market Analysis
The economical value of the medicinal plant industry has reached
US$ 100 million per year, meanwhile the world potential reached
US$ 43 billion in 2001. It is estimated that it will grow to US$ 83
billion in 2002 and reach US$ 5 billion in 2050. It can be said that
the medicinal plant growing is moving towards a promising
direction (Direktorat Tanaman Sayuran, Hias dan Aneka
Tanaman, 2002: 4).
22
2.4.1 Market Characteristics
Based on the interview with Mr. Pinondang Poltak Marganda7 on
June 25th 2007 and Mr. Galih Prasetya Utama8 on June 30th 2007 the
medicinal plant market can be identified through several
characteristics related to the “back to nature” trend of the world
community consuming the medicinal plants, those characteristics
are:
1. Sensitive to the healthy idea’s about the use of nature
material, based on a research. The meaning of this
characteristic is when one product is exposed, so there will
be a me too-product so that the market of that product will
go down. To design a stable market need, but not easy to go
down, it is important to design a holistic trend.
2. In the rainy seasons, the peoples willingness to consume
natural material is much bigger than consuming synthetic
medicine, especially consuming jamu.
3. Consuming jamu, standardized herbs, phytopharmaca and
reflection massage are an alternative healing besides using
synthetic medicine.
4. There are some commodities which are long lasting and
needed in the market, most of the manufactured company
invested their money to produce those commodities as
primary commodity in their production or their product
7
Representative from the Direktorat Budidaya Tanaman Sayuran dan
Biofarmaka, Departemen Pertanian
8
Representative from the School of Pharmacy ITB and the owner of
www.bisnisfarmasi.wordpress.com
23
line up. PT. Nyonya Meneer prioritizes and focuses on
Curcuma domestica or kunyit. Other products that are as the
primary commodities in the manufactured companies are
kunyit, jahe, lengkuas, kencur, kapulaga and aloe vera.
Beside those products, other medicinal plants products are
also needed such as kumis kucing, rumput fatimah,
pegagan, temulawak, etc.
5. Nowadays all the pharmaceutical companies have part of
their profit from the medicinal plants products, from
cosmetics to tooth paste. At least they have one “herbal”
product edition or there is a mix of medicinal plants in the
composition of the product that the companies produce.
Those companies don’t want to be bothered by the natural
material that are difficult to be processed. They want it in a
form of extract so to make it easier in the downstream
process and not too take much time in the upstream
process, one example of it is PT. Indofarma that dares to
buy in a great price for the extracts.
2.4.2 Market Size and Needs
Nowadays natural material is becoming a primary consideration
of the business development in several pharmaceutical companies.
Almost every synthetic medicine companies have a natural
material development division such as Sanbe Farma, Kalbe Farma
and Kimia Farma. For Sanbe Farma itself has already used two
experts from China and India for two years, to help its natural
material developmet division. The infrastructure that they built is
in research and business development.
24
Moreover,
there
are
a
definite
finite
demand
in
biopharmaca or medicinal plants industry for several commodity.
The most demand is Ginger which is needed totally 5000 ton
followed by Kapulogo and Temulawak by 3000 ton, Kunyit 3000
ton dry simplicia and 1500 ton rhyzome or wet, and there are 2000
ton needs of Adas and Kencur. And still hundreds of ton are
needed yearly in the biopharmaca or medicinal plants industry.
For complete it will be shown and mentioned in the table below:
Table 1. The needs of Indonesian Traditional Medicine Industry on The Variety
of Biopharmaca
25
Source: Departemen Pertanian, 2002
Eventhough the data was recorded in 2002, but based on the
interview with the Direktorat Budidaya Tanaman Sayuran dan
Biofarmaka, the demand of medicinal plants is still high, because
several manufactures still lack of the supply of the medicinal
plants material, it is estimated
that the fulfillment on the
medicinal plants for only 2 % yearly, so from 2002 until 2007 there
is only 10 % of fulfillment in the medicinal plants demand,
therefore there is still a wide market to run business in this
market.
Naturalife Greenworld is aiming at having the market
share of ginger for 1% of the total market of ginger or 50 tons per
year or as big as IDR 200 millions from the total market of 5000
tons or as big as IDR 2 trillions. This is actually for the initial
strategy, because Naturalife Greenworld believes that in the
following year the company can increase the market share to 526
20% for ginger. For kumis kucing, since there are no players in this
product, Naturalife Greenworld is optimistic to lead the market
share by 70% of 20 tons which is 14 tons or equal to IDR
996.000.000 per year. Lastly for rumput fatimah we are aiming at
supplying 630 kilograms for every two months. Specifically for
rumput Fatimah, Naturalife Greenworld is the pioneer of playing in
rumput fatimah market.
2.4.3 Industry Growth Trend
To analyze the growth trend of biopharmaca or medicinal plants
market, Naturalife Greenworld uses the growth in production as
showed in Table. 2. It can be seen that there is an increasing
growth trend of productions from almost every products, 25-30 %
annually. Therefore it can be said that the demand of medicinal
plants from 1997 to 2005 tends to increase.
27
Table 2. Production of Medicinal Plants in Indonesia
Source: BPS Indonesia, 2006
28
Moreover the growth of the medicinal plants need can
also be seen from the growth numbers in the traditional
medicine industry either small and medium medicine
industries (IKOT) or big medicine industries (IOT) in the
year 2000 there were only 87 IOT and 723 IKOT, and in the
year 2003, there were 118 IOT and 973 IKOT (BP POM, 2000
and 2003). That figure shows that there is the increasing
number of medicinal plants industry, implying that there is
an increasing number of people consuming medicinal
plants9.
Based on the data from Corinthian Infopharma
Corpora (CIC), in 2000 the consumption of traditional
medicine in Indonesia increased 5,4 % annually, while
globally it increases 20,96 % annually. BP POM Republic of
Indonesia stated that the consumption of traditional
medicine will always increases nationally and internationally
as the impact of the new trend of back-to-natures living10.
2.4.4 STP (Segmenting, Targetting, Positioning) Analysis
2.4.4.1 Segmenting
The segmentation of Naturalife Greenworld market is going
to use
the variable of industrial type which vary from
9
http://www.bi.go.id/sipuk/id/lm/tanaman_bahan_jamu/pendahuluan.as
p
10
http://www.bi.go.id/sipuk/id/lm/tanaman_bahan_jamu/pendahuluan.as
p
29
traditional medicine manufacture to food and beverages
manufactures,
commonly
called
as
Intermarket
Segmentation meaning that “the consumers have similar
needs, eventhough they have different core of businesses”
(Kottler, 2004: 250). Table 3 shows the number of companies
in each market segment:
Table 3. Market Segment for Medicinal Plant Product
No
Market Segment
Numbers
1.
Traditional Medicine Industry
118
2.
Smal and Medium Medicine Industry
917
3.
Pharmacy Industry
168
4.
Food Industry
55
5.
Restaurant
309
6.
Export
(jahe only) Malaysia,
Singapore,
Japan,
Saudi Arabia, USA
7.
University
54 Pharmacy Faculty
Source: Compilation of Several Data
The market segment of Naturalife Greenworld are
divided into:
1. Industri Obat Tradisional/ Traditional
Medicine Industry
Industri
Obat
Tradisional
(IOT),
is
a
traditional medicine industry or well known
as big Jamu manufacturer. The numbers of
30
IOT had increased to 118 in 2003 compared to
1999 which was only 87 IOT. IOT industries
in Indonesia are led by Sidomuncul, Nyonya
Meneer and Air Mancur. Most of these type
of IOT are in a form of PT or perseroan
terbatas11.
2. Industri Kecil Obat Tradisional/ Small
and
Medium
Traditional
Medicine
Industry
Industri kecil Obat Tradisional (IKOT), is a
small medium traditional medicine industry
producing jamu in a small amount of
production compared to IOT. Most of IKOT,
is a small medium enterprises and play
locally outside the capital city. Now the
numbers of IOT have reached 917 industries
compare to the year 1999 which are 833
industries12.
3. Pharmacy Industry
Pharmacy industry needs the natural based
material so much in a form of biopharmaca or
medicinal plants, since the peoples have
shifted their habit to back-to-natures habit.
There
are
168
pharmacy
industries
throughout Indonesia and the big players in
11
http://www.republika.co.id/koran_detail.asp?id=213084&kat_id=150
12
http://www.republika.co.id/koran_detail.asp?id=213084&kat_id=150
31
pharmacy industries are Kimia Farma, Kalbe
Farma, Sanbe Farma, Indo Farma and Bio
Farma (B2B Directory, 2006-2007).
4. Food Industry
What does it mean by food industry here is
the need of food industry to consume spices
or medicinal plants for its production. There
are 55 food industries including the market
leader like Indofood, Ajinomoto, Sasa and
Magfood (B2B Directory, 2006-2007).
5. Restaurant
Restaurant can also be categorized as the
market segment for medicinal plants, because
It actually uses medicinal plant as spices.
There are 309 restaurants including fastfood,
foreign food and traditional or indonesian
food restaurant. The company that uses
spices from medicinal plants are included PT
Yakiniku Daidomon, PT Nyonya Suharti
Ayam
Goreng,
PT
Pondok
Laguna
Indonesian Food and PT Natrabu Indah
Agung (B2B Directory, 2006-2007).
6. Export
As mentioned above there are five countries
that have big demands in
ginger like
Malaysia for 767 tons per year, Singapore 402
tons per year, Japan 527 tons per year, and
32
Saudi Arabia and USA 54 tons per year each
(Statistik Pangan Luar Negeri IndonesiaIndikator Pertanian, 2005).
7. Pharmacy Faculty
The pharmacy faculty also has demand for
medicinal
plants
for
its
research.
For
example, School of Pharmacy ITB needs one
ton of medicinal plants for one semester.
There are 3 major pharmacy faculty in
Indonesia UGM, ITB and University of
Indonesia.
2.4.4.2 Targetting
The target markets that is aimed by Naturalife Greenworld
are all the market segment having the most needs of Ginger,
kumis kucing and rumput fatimah as the basic material for the
purpose of the their production.
2.4.4.3 Positioning
Naturalife Greenworld will position itself as the the
medicinal plants supplier company which provide high
quality and safe products in line with an international
standards, and customize the products depending on the
requirements and demand of the industry.
33
2.4.5 Entry Barriers
In general the biopharmaca or medicinal plants business has
little entry barriers, since the market has less tight
competitors because the players in this industry that are
focusing in the suppliers are still few. Most of the suppliers
are the individual instead of the company. Meanwhile there
are also the companies as the suppliers such as Emeralindo
and Haldin. These individuals have the big possibilities for
their products to be rejected, the manufacturer choose the
company more because of their legalities.
Second, “the players in this business are focusing
themselves on wet harvested product rather than extract
processed product, this means that they are giving the wet
harvested product in a commodity which have no added
value to the customers which in the end the customers could
bargain for a lower price” (Galih Prasetya Utama, Private
Interview, 30-06-2007). So in case of these issues Naturalife
Greenworld had prepared itself to have a simple technology
of drying-to-extract plants which is not costly expensive and
easy to handle.
2.5
Marketing and Sales Strategy
In marketing and sales strategy there will be a discussion on
the the strategy that will be implemented by analyzing it
using the common tools of marketing and sales theory.
34
2.5.1
Competitive Strategy
No one strategy is best for all companies. “Each company
must determine what makes the most sense given its
position in the industry and its objectives, opportunities and
resources” (Kottler and Armstrong, 2004: 573). In the
Principle of Marketing books writen by Phillip Kottler and
Gary Armstrong, there are six basic competitive strategy.
The first three competitive strategy is called as the
three winning strategies include:
1. Overall Cost leadership, which means the
company works hard to achieve the lowest
production and distribution cost.
2. Differentiation, which means the company
concentrates
on
creating
a
highly
differentiated product line and marketing
program.
3. Focus, which means the company focuses
its effort on serving a few market segments
well rather than going after the whole
market.
In the Kottler and Armstrong winning strategy since
Naturalife Greenworld is a new established company, the
most suitable strategy to implement is by using Overall Cost
Leadership because by having these strategy it can reduce
the cost from production and distribution in order to gain
maximum efficiency of money which can be allocated to self
funding program for Naturalife Greenworld.
35
The second three competitive strategy is called as the
value discipline for delivering customer value, include:
1. Operational Excellence, which means the
company
leading
provides
its
superior
industry
in
value
price
by
and
convenience.
2. Customer Intimacy, which means the
company
provides
superior
precisely
segmenting
its
value
by
products
or
services to match exactly the needs of the
targeted customers.
3. Product Leadership, which means the
company
provides
superior
value
by
offering a continuous stream of leadingedge products or services.
In these last three strategies, Naturalife Greenworld
will use Customer Intimacy which we will give flexibility to
the customers needs of what form of product they want to be
supplied on. By having these strategies, the company added
value will increase in the eyes of customers.
36
2.5.2
Strategic Opportunities
2.5.2.1 SWOT Analysis
Strength
-
Networking from government, NGO,
business practitioner, academician and
also virtual networking.
-
Product quality.
-
Customer Relationship.
-
Team work and ethos.
Weakness
Not yet recognizable by the market.
Opportunity
-
There are still big space in the market of
which the industry need.
-
The trend of medicine is changing to the
natural based medicine or back to nature
trend which is not just nationally but
also internationally.
Threat
-
The threat from the imported product
especially from China.
-
The threat from the substitution product
of synthetic based material which is
cheaper.
37
2.5.2.2 Competitive Advantage
Competitive advantage is an advantage over competitors
gained by offering consumers greater value (Kottler,
2004:259).
The
competitive
advantage
of
Naturalife
Greenworld product is in term of quality. The quality of
products
of
which
Naturalife
provides
has
been
standardized, depending on the market needs. Generally it is
natural from its farming until its drying.
2.5.3 Marketing Strategy (4 P’s)
2.5.3.1 Product
Naturalife will carry a variety of quality products that will
enable to provide full service delivery to medicinal plants,
traditional medicine industries and pharmacy industries. The
product that naturalife is focusing are on Ginger (Zingiber
officinale), kumis kucing (Orthosipan aristatus) and rumput
fatimah (Labisia pumilla).
2.5.3.2 Pricing
The price of each product offered vary based on the local
market prices, for dry Ginger it is IDR 7.000 to IDR 13.000 @
1 kilogram, for dry Kumis Kucing it is IDR 13.000- IDR
20.000 @ 1 kilogram and for Rumput Fatimah it is IDR
110.000- IDR 180.000 @ 1 kilogram. For dry medicinal plants
there is no fixed rule, commonly it depends on the
negotiation from the supplier and the consumers, but the
rate that is used are as mentioned above.
38
2.5.3.3 Place
The Place of which naturalife cooperate with the farmer on
getting the best quality of product is in Lido, West Java for
rumput fatimah and kumis kucing and in Banten for Ginger.
Both of these area are an inventarization of medicinal plant
farming that make easy access from the party that are
involved between farmer, supplier and Industry.
2.5.3.4 Promotion
-
Naturalife
Greenworld
will
listed
itself
in
international or national trade website like alibaba for
advertising.
-
Direct Selling to the targeted market by making first
the complete database of those targeted market.
-
Referral Marketing, by the network that Naturalife
Greenworld have, it enables us to get a reference.
Most of the marketing expense will be used for
promotion, the expected marketing expense is around 2
million IDR per month. It will be vary according to the need
of the expense.
2.5.4
Sales Forecast
Naturalife Greenworld estimated that the growth of sales is
20%-30% per year depends on the unit product sold and the
company maximum supply capacity, because Naturalife
Greenworld are pretty sure by acknowledging the specific
39
market for different product in the first year it will make
easy Naturalife in the upcoming years. The estimated
increases of sales were assumes of the increasing number of
capacity that Naturalife Greenworld could supply or the
increasing price of the products itself. The specific number of
sales forecast is shown in table below:
Table 4. Naturalife Greenworld Sales Forecast (In Rupiah)
Total Year 1
Total Year 2
Total Year 3
Jahe
Rp560.000.000
Rp960.000.000
Rp1.088.000.000
Kumis Kucing
Rp655.200.000
Rp914.550.000
Rp1.037.400.000
Rumput Fatimah
Rp451.027.500
Rp565.950.000
Rp597.712.500
Rp1.666.227.500
Rp2.440.500.000
Rp2.723.112.500
Sales
Total Sales
2.6
Operational Plan
The objectives of the Naturalife Greenworld operation plan
are:
1. Efficiency and easiness in distribution and production
2. To keep the product quality and service to fulfill the
demand of the targeted market.
3. To give the best service to the targeted market in
order to give brand image of Naturalife Greenworld
company.
40
The discussion of the operational plan will include the
business process, the capacity of production, the contract
agreement system.
2.6.1
The Business Process
The Naturalife business process is the whole business
process showing the time and direction of the process from
farmer to the end user which is the manufacture. The table in
the following page shows the business process of Naturalife
Greenworld company.
41
Table 5. Naturalife Greenworld Business Process
NATURALIFE GREENWORLD BUSINESS PROCESS
FARMER
NGW
MARKET
FARMING
1-8
month
HARVEST
1-5
weeks
WAREHOUSING
1-2
weeks
2 days
PLANT DRYING
NO
PACKAGING
(Optional)
LAB CHECKING
(SAMPLE)
1-8
days
QUALITY
ASSURANCE
3 days
YES
1
weeks
TRANSPORTATION
2 days
NO
COMPANY LAB
CHECK
3 days
YES
MANUFACTURE
end
The process start from the farming, in this farming
stage the medicinal plants are being planted by the farmer.
The three different kinds of products have different times of
planting time. Ginger lasts for eight months, while kumis
kucing and rumput fatimah only last for one month. After the
42
farming, the process comes to the harvesting taking from one
to five weeks, depending on the planting method. If all
plants (ginger, kumis kucing and rumput fatimah) are planted
in the same time, the harvesting will only last one month but
if they are planted in “tumpang sari” or random, the
harvesting could take five months.
The next process is the warehousing which takes one
to two weeks. The warehousing takes place in the farmer
side. After the warehousing, the next is the plant drying
process, the plantations are being formed to simplicia or
extract.
In the next stage, the sample of the drying plants will
be taken to Bandung for lab checking which takes one to
eight days. The lab checking of Naturalife Greenworld will
also conduct the quality assurance for three days to ensure
the products have been standardized. The products that
fulfill the standard will be directly packaged in the farmer
side for one weeks and the products that are not passed the
checking will be returned to the farmer and exchanged them
with other plants.
After the packaging process, the next stage is
delivering the plants to the market or manufacturer or to be
re-checked again in their internal lab, the check are
commonly just for formality because the products have been
certified in the previous lab checking. At the end, products
will be processed in the manufacture.
43
2.6.2
Capacity
The capacity of supply from Naturalife Greenworld are:
Table 6. Naturalife Greenworld Maximum Capacity of Supply
Jahe (ton)
Kumis Kucing (ton)
Rumput Fatimah (kg)
Maximum Capacity
150 ton/8 bulan
14 ton/2 bulan
1000 kg/2 bulan
The assumptions from these capacity is based on the
ability of the medicinal farming area of which Naturalife
Greenworld products are being taken in this case Lido and
Banten. But Naturalife also have wide range of farmer
networking throughout Indonesia especially in Java if in
example the demand increase.
2.6.3
Contract Agreement System
The contract agreement system is the contract agreement that
is made by the farmer and Naturalife Greenworld to ensure
the capability of farmer on fulfilling the demand which
Naturalife Greenworld asks for a month or a year and
Naturalife Greenworld capability on giving the payment to
the farmer. So at the end, no party from the farmer and
Naturalife Greenworld are being disadvantaged. These
Contract Agreement systems will be conducted legally in
front of the notary public.
There are two kind of system that is used by
Naturalife Greenworld to build long term cooperation with
the farmers, legally- formal and social way. Initially, in the
44
first step Naturalife Greenworld finds the potential region to
become farming partner, Naturalife Greenworld build
emotional engagement with intense communication and
trust building by opening new captive market for the farmer.
Secondly, when the farmers are getting used with the
company,
and
they’ve
already
trust
the
institution.
Naturalife Greenworld offering a new agreement for long
time mutual cooperation, legally in front of the notary
public.
The first term ( Social Trust Building) range time can
be vary according to the character of the farmers, and the
sustainability of the product market itself, as soon as
Naturalife Greenworld show the commitment of emerging
market and keep the sustainability of market share, the
farmer are getting faster to get more trust with the company.
These contract agreement systems will also be
implemented
between
the
consumer
and
Naturalife
Greenworld in order to keep the demand always stable and
one of the party are not reluctant with the agreement.
2.7 Management Team
2.7.1 Key Member
Naturalife Greenworld will be run by 6 people of which also
take a part as the managers and also having the role as the
permanent employee, because in the first establishment of
the company Naturalife Greenworld doesn’t have employee.
But here the managers is also the employee. There are 4
45
divisions, each divisions will hold on and responsible to
what their task is. Responsible for leading the company is the
task of the general manager, responsible for sales and
marketing is the task of sales and marketing division,
responsible for finance is the task of finance division,
responsible to run the company administration is the task of
corporate secretary, responsible of research and development
is the task of R&D division and responsible on production
and quality assurance is the task of production and quality
assurance division.
Beside the permanent employee which consist of six
members, there will be also a temporary employee which
have a task of keeping and guarding the warehouse. There
will be three temporary employees. These temporary
employees will be responsible to the production and quality
assurance division.
2.7.2 Organization Structure
The figure in the next page is showing the organization chart
of Naturalife Greenworld company.
46
General
Manager
Corporate
Secretary
Sales and
Marketing
Division
Finance
Division
Production
and Quality
Assurance
Division
R&D Division
Warehouse keeper and guard
Figure 7: Naturalife Greenworld Organization Structure
2.8
Financial Plan
Naturalife Greenworld is a company that is established to
run a business which aimed at gaining the profit. Therefore
the
function
of
financial
management
in
Naturalife
Greenworld is to make a financial planning, the allocation of
investment and resources in order for the company to get a
guarantee on the business sustainability and stability, so at
the end the company objectives can be achieved.
Beside that, Naturalife Greenworld thinks that
financial strategy is very important and one of the important
factor in the decision making on achieving the objectives of
the company. The detail of the strategy will be later
discussed in the next sub chapter.
47
2.8.1. Start-up Capital
The Initial investment that Naturalife Greenworld estimated
is the amount of IDR 94.600.000, which is allocated for cash,
legal,
warehouse
rent
office
rent,
office
renovation,
laboratorium rent, equipment and others.
For detail it is shown in the table below:
Table 7. Naturalife Greenworld Start-Up Summary (In Rupiah)
Start-Up Summary
1. Asset
Requirements
QTY
a. Computer
b. Printer
c. Fax
d. Office Kit
(Furniture)
1
1
1
4.750.000
1.000.000
1.250.000
3.000.000
2. Working Capital
a. Salary
20.700.000
b. Warehouse Rent
20.000.000
c. Office Rent
12.500.000
d. Laboratorium Rent
1.500.000
e. Office Supplies
400.000
3. Initial Cost
a. Legal
b. Office Renovation
c. Market Research
Total Start-up Cost
10.000.000
4.500.000
15.000.000
94.600.000
2.8.2 Basic Assumptions
In designing a financial plan Naturalife Greenworld use the
basic assumptions as shown in the tables below:
48
Table 8. Naturalife Greenworld Maximum Sales Capacity
Sales
Jahe (ton)
Kumis Kucing (ton)
Rumput Fatimah (kg)
Maximum Capacity
150 ton/8 bulan
14 ton/2 bulan
1000 kg/2 bulan
8000/kg
13650/kg
115500/kg
Table 9. Naturalife Greenworld Expenses Assumption
Expense
Amount
Warehouse Rent
Rp 20 mill@year
Office Rent
Rp 12 mill@year
Lab Rent
Rp 2mill@year
Rp 980thou-Rp
1,3mill@month
Utility Expense
Tarnsportation
Administration
Marketing Expense
Salary Expense
Miscellanoues Expense
Rp 1.5 mill/6 ton
Rp 416.667@month first
year
Rp 2.083.333@month
first year
Rp 20.700.000@month
first year
Rp 1.250.000@month
first year
Explanation
In Advance, Increase Rp 500
thou yearly
In Advance, Increase Rp 500
thou yearly
In Advance, Increase Rp 500
thou yearly
Fluctuated
Increase total Rp 500 thou
yearly
Increase total Rp 5 mill yearly
Increase Rp 150 thou yearly
every month
Increase total Rp 1 mill yearly
Tax 25%
Depreciation
Profit sharing 40% from net
profit after tax
Worst Case Scenario
Worst Case Scenario
a. Computer
79167
b. Printer
27778
c. Fax
d. Office Kit
(Furniture)
14881
Total/month
171825
Unit Sold 90%
50000
COGS Increase 10%
49
2.8.3 Revenue
The tables below shows the Naturalife Greenworld projected
revenues:
Table 8. Naturalife Greenworld Projected Revenue (In Rupiah)
Total Year 1
Total Year 2
Total Year 3
Jahe
Rp560.000.000
Rp960.000.000
Rp1.088.000.000
Kumis Kucing
Rp655.200.000
Rp914.550.000
Rp1.037.400.000
Rumput Fatimah
Rp451.027.500
Rp565.950.000
Rp597.712.500
Rp1.666.227.500
Rp2.440.500.000
Rp2.723.112.500
Revenues
Total Revenues
2.8.4 Project Measurement Analysis
In
analyzing
the
project
measurement,
Naturalife
Greenworld will use three method to identifying whether the
business is feasible or not.
2.8.4.1 Payback Period
“Payback period is a period which shows how long the
investment in one business can be return” (Rangkuti, 2005:
214). The fastest the return, the more profitable the business
is or on the other hand the the less number of the payback
period the business is better. Naturalife Greenworld
estimated that the payback period is 15 months 25 days for
the normal case. For the worst case, the payback period is
unidentified with the scenario that the COGS will increase 10
percent and the unit sold is 90 percent.
50
2.8.4.2 Net Present Value (NPV)
This method is used to analyze whether the business project
is feasible or not to run. “If the Net Present Value (NPV) is
positive, so the project is producing cash inflow bigger than
the investment opportunity cost” (Rangkuti, 2005: 205). On
the other hand if the NPV is > 0 the business is feasible.
Naturalife Greenworld NPV is IDR 314.649.416 for the base
case which is bigger than “0”, so the business based on the
normal case is feasible. For the worst case the NPV is below
“0”. It means that the business is not feasible if the product
unit sold is 90 percent and the COGS increase 10 percent.
2.8.4.3 Internal Rate of Return (IRR)
IRR is a method to measure level of investment. “IRR shows
the project ability to get an average profit as long as the
project run considering from the level of interest rate”
(Rangkuti, 2005: 207). If the IRR is bigger than the interest
rate it means the business is feasible to run. Naturalife
Greenworld IRR is 155 percent for the normal case, from the
normal case scenario we can see that the business is feasible
because it is bigger than the interest rate in suku bunga
deposito bank which is only 6,75 percent. Moreover Naturalife
Greenworld also make an addition of 30 percent to the
deposito to make a total of 36,75 percent because the addition
is worth the risk that the business brings, but still Naturalife
Greenworld IRR is still bigger in the normal case. In
conclusion based on the normal case this business is very
51
good to run. The condition is vise versa in the worst scenario
where the unit product sold is 90 percent and the COGS
increase 10 percent, the IRR less than interest rate that
Naturalife had sent for the benchmark. In summary to keep
on this business therefore Naturalife Greenworld should
maintain sales of unit close to 100 percent and keep the
COGS stable not to increase very far.
52