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Risk satisfied with the current president of

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Risk Assessment

Type of Risk

Score

Ways to offset or deal with
risk

Political
·        
The
next election is in 2019
·        
Current
leader or President of Indonesia is Joko Widodo
·        
Joko
Widodo is a part of the Indonesian Democratic Party of Struggle
·        
High
level of corruption in judiciary
·        
Recurring
outbreaks of public violence
·        
Demands
for greater autonomy or independence
·        
Residents
are satisfied with the current president of Indonesia
·        
Presence
of a local terrorist organization, Jemaah Ismaliyah (JI)
·        
Weak
level of rules of law
·        
Criminal
and administrative laws are not enforced in certain parts of the country
·        
Possibility
of the recurring event of ouster of Suharto in 1998, violence amongst cities
or the Chinese Indonesian population due to the arousing sentiments of local
resident. This violence has caused a number of casualties, which tells us it
was a serious matter.
·        
Indonesia
ranks 88 out of 175 in the Annual Corruption Perceptions Index which
indicates the level of political corruption in the country. (Indonesia has
been showing a steady improvement since 2004)
·        
Nepotism
– Favouring a family member over others, perhaps in granting someone a
political position.

6.5/10

·        
Solid
preparation of what you might have to face and how to talk or deal with major
political figures.
·        
Possibly
having to give a “bribe amount” to get something done in the country
·        
Information
collection – thoroughly know what the current events in the country are and
how to deal with controversial situations.
·        
Prevent
yourself from any controversies or saying your opinion out loud
·        
Hiring
a translator or driver that can help your understand the language, culture
and values of Indonesia as well as wan you of any dangerous acts about to
take place.

Financial
·        
Indonesia
is  a developing country therefore, lack
of infrastructure quality and quantity exists
·        
Various
types of developments may endanger or threaten the economic stability of
Indonesia leading to damage to your investment or business in the country.
·        
High
inflation, a heavily depreciating Indonesian rupiah exchange rate, rising
poverty, slowing GDP growth, rising unemployment rates and fiscal instability
due to a widening current account deficit or weak tax revenue.1
·        
Limited
Canadian operating banks in Indonesia include TD Bank, Scotiabank and RBC
Bank.
·        
Poor
economic status
·        
Lack
of money for investment in areas such as 
infrastructure development
·        
Multiple
ways to create fraud in business since it is a developing country and laws aren’t
enforced or strict towards theft or fraud cases

7/10

·        
Awareness
of economic development in infrastructure
·        
Canadian
businesses wanting to expand into Indonesia or possible start some kind of
business here should study the macroeconomic indicators of Indonesia which will
provide them with full and important information about Indonesia’s economic
state and its stability.
·        
No
legal protection on intellectual property so in order to do business in
Indonesia one must be cautious of the surroundings and alertly be aware of
any suspicions of theft.
·        
It’s
recommended that the owner get his/her business insured in case of any theft
or fraud.

Social/Cultural
·        
Language
difference (Bahasa Indonesian, Javanese, Dutch and Sundanese)
·        
It
is recommended to understand the basic greetings of the Bahasa language
·        
Position
in business and hierarchy is very much valued
·        
Difference
of etiquettes  
·        
People
of Indonesia are usually very open with sharing personal information or
information about their family
·        
Religion
and cultural differences (Largely Muslim population)
·        
Enforced
strict Islamic values and cultural aspects of life including the way people
dress especially women
·        
Many
controversies regarding the Muslim religion and their cultural values
·        
Violence
against Chinese Indonesian during the resignation of Suharto was caused due
to people’s perception of the economic situation of Indonesia. Chinese Indonesians
are a large part of business in Indonesia but considered a minority in
population. During this time there already political and economic disturbance
which made it easier for them to instigate the Chinese Indonesian population.

·        
Regional
violence that occurred between major cities such as Kalimantan, Sulawesi and
Moluccas previously may occur again as it was a result of triggered religious
and ethnic sentiments.

5/10

·        
Canadian
businesses should be aware of the Indonesian violence that take place every
now and ten and to stay away from them. This can be done by not putting out
an opinion towards any religious or ethnic background of the Indonesian
culture or even any political figure unless they know the political figure
very well and have comebacks for their argument.
·        
Be
prepared when planning to do business in Indonesia about their basic business
etiquettes
·        
Do
not reject a gift if offered as it looks rude and will create a bad
impression
·        
Attempt
to be open-minded in conversation with Indonesian people and talk in a
comfortable and calm manner
·        
Giving
a business card with their language printed on one side is recommended
·        
Giving
a gift in the initial meeting is recommended and tends to create a good
impression
·        
Its
best for anyone in Indonesia there for business reasons to stay away from any
controversies or any politically related talk or topic as it may cause
provoked sentiments leading to violence.
·        
Hiring
a translator or driver that provides you with all information of the events
occurring in Indonesia and their severity as well as help you understand the
Indonesian cultures and values.
·        
When
greeting a group of people start with the eldest or the most senior person
present

Technical
·        
Lack
of infrastructure quality and quantity
·        
Poor
and inconvenient layout of buildings, roads and health centres
·        
Indonesia
ranks 62 of 140 economies in terms of infrastructure development.
·        
Advanced
technology and innovation is required
·        
Indonesia
has not been able to keep up with the infrastructural developments since the economic
drop.
·        
The
weak infrastructure implies that the economy is run in an inefficient manner due
to logistic costs being high, businesses lack competitiveness since the cost of
doing the business is high
·        
There
is a high level of social injustice (families are unable to reach the
hospital or children are not able to go to school).
·        
Manufacturing
facilities are very basic and unprofessional and may breakdown at any time,
no guarantee.
·        
Machines
are not of best quality and therefore require more maintenance and energy to
be fixed in case of a sudden break down

6.5/10

·        
Awareness
of economic development in infrastructure and possible opportunities of
sending Canadian Infrastructure expertise to take action against this and
develop a strong infrastructure as it will benefit both the Indonesians and
Canadian businesses causing a win-win situation in which both sides are
satisfied.
·        
Invest
in the infrastructure sector of Indonesia, for example the mining sector.
·        
Canadian
companies need to be aware of such manufacturing issues so that they can be resolved
without delay or problems
·        
Hire
someone to service these facilities, do repairs and regularly checkup on them
to see if they are functioning correctly and assume responsibility
·        
Purchase
personal or  life insurance in case of
any tragedy that might occur unexpectedly such as an accident
·        
Purchase
insurance to protect property and manufacturing facilities

Natural
·        
Indonesia
is located on the Pacific ring of Fire and most of its   geographical region consists of water
which makes it more vulnerable to natural disasters occurring.
·        
The
effects of natural disasters such as earthquakes, tsunamis, volcano eruptions
and floods are worsened due to the fact that Indonesia has poor Infrastructure.
·        
Indonesia
is a series of Islands surrounded completely be large water bodies increasing
the risk of higher amounts and more intense tsunamis.
·        
Increased
risk due to location and surroundings
·        
Increasing
amounts of plastic pollution causing the death of sea animals including fish
·        
Air
pollution created by the huge population of Indonesia and their regular use
of transportation vehicles that let out greenhouse gases in the environment
·        
Unclean
and polluted breathing air
·        
Diseases
triggered from the pollution created and spread in the air and water

8/10

·        
Providing
Canadian businesses information about these situations and the reasons or
likeliness of their occurrence.
·        
Regularly
checking updates on news or other statistics that provide information on the
natural disaster occurrence patter in Indonesia.
·        
Getting
an insurance for your business so that even if you bear a loss due to some
kind of a natural disaster you have the insurance to cover for you and so you
won’t be completely broke or in loss.
·        
Be
prepared for any circumstances you may have to face in case of the occurrence
of a natural disaster in Indonesia during the period of time you stay there
for
·        
Be
aware of the regular climate and disaster conditions in Indonesia
 

International
Marketing

a)      
The
potential market size for a simple consumer product in Indonesia would be 176,764700
of their total population. This amount would be considered the middle class
population of Indonesia which is continuously growing and has an annual growth
rate of 5.7%. The consumer product is a light and easy steaming iron created
for the lower-middle class population of Indonesia which will be priced at
$9.99. The average salary for jobs in Indonesia is approximately 163,696,498
Indonesian rupiah (IDR) per year which is about $15, 000 in Canadian dollars. The
percentage of adults between the ages of 25-45 earning the average amount of
salary in Indonesia is 67.66%.

 

b)     
If
it is a food product it must not be decayed or decomposed or something that
might be harmful to humans, animals or the environment and should have a product
shelf life of 3 months after its arrival at the destination port. I would make
sure the product has no green on it as the colour green is forbidden in
Indonesia due to certain religious beliefs.

 

 

c)      
Labelling
product in Indonesia must be in Indonesian language, roman text and Arabic
numerals. The product packaging must include the name of the product, net
weight or net volume using metric units, name and address of manufacturer,
registration number, list of ingredients or materials used to make the product,
expiry date, production date or production code. In Indonesia, according to the
law the geographical information is compulsory so the product must say where it
was made or manufactures as this indicates the region of origin of the goods or
products. This allows consumers to be aware of the geographical factors related
to the country about the product such as natural, human, and the quality of the
product.

 

d)     
I
would recommend the decentralized market entry strategy to launch the steaming
iron because the labour and material costs in Indonesia are a lot less than
that of Canadian costs. Manufacturing the steaming iron in a manufacturing
facility located in Indonesia and selling the product there would save us many
expenses such as shipping, labour and material costs. The Canadian company
could hire a sales force there and even license its brand to a local
manufacturer. If the Canadian company grows big and prospers quickly it might
consider buying foreign companies to make the product.

 

e)      
When
advertising and promoting the steaming iron, the strategy that would work best
is creating a new ad strategy because Indonesia consists of significant
cultural differences from Canada and their consumer market has a different
thinking and way of perceiving an advertisement which is why I would have to
completely change the existing a for the steaming iron. . Some modifications I
would add to the ad is remove all green colour from the ad since the colour
green is forbidden in Indonesia, create a television, radio and newspaper
version of the ad since Indonesian use the television and read the newspaper on
a daily basis. The radio is by far the most important and frequently used
medium in Indonesia.

 

f)       
The
status of social media in Indonesia is described as one of the top five social
media markets in the world. Indonesia is quickly figuring out the benefits of
being exposed to multiple social media as Twitter, Facebook and Instagram.
About one third of the Indonesian population actively uses the internet that is
88 million or 35% of the total population of Indonesia. This amount has grown
15% over the past 12 months2. Nearly 90% of social
media users are below the age of 34 and about 54% of the social media users are
between the ages of 16-24. This tells us that the young and new generation is
actively taking part latest advancements and is quickly being exposed to new
technology.

 

 

g)      
About
326.3 million SIM cards are owned in Indonesia which is almost double the total
population of Indonesia. This tells us that, on average every mobile user owns
2 SIM cards. Approximately 30 million teenagers in Indonesia use the internet
on a regular basis. 69% of Indonesians use computers, 34% sue laptops, 52% use
hand phones, 21% us smartphones, and 4% use tablets.3

 

 

 

 

 

 

 

 

 

Recommendations and Conclusion

I would recommend that a Canadian
company in the infrastructure sector should invest in the Indonesian market to
support its energy sector. Multiple opportunities exist for Canadian businesses
to expand and grow. Indonesia would be a good choice when considering a new
market for expansion purposes because they have a growing middle class whose
expenditures are also growing at a very fast pace. Moreover, market analysts
say that this group of people is beginning to purchase beyond just the daily or
basic necessities of life. Middle class families that earn an average salary
are starting to put up multiple air conditioners around their homes and nearly 25%
of them now own cars.4
Therefore, creating a low-budgeted product and targeting the middle-class
population of Indonesia will result in great success and profit. Also,
Indonesia provides many opportunities to invest in Indonesia’s infrastructure
such as pipelines, storage, reserves, oil trading hubs, shipping destinations
and electricity supply. They are in need of expertise and quality work which
Canadian businesses can provide them with. Canada can make new pipelines for
the distribution of the oil in Indonesia to happen smoothly or open up new oil
trading hubs for Indonesia to conveniently trade. The drawbacks in starting a
business or investing in Indonesia is the unexpected violence against one
another and the current economic state of the country. The economic stability
of Indonesia directly relates to the infrastructure, so if a Canadian business
were to invest in the infrastructure sector of Indonesia, the economy would be
in a better state than it currently is and would be more stable leading to a
win-win situation in which both sides are satisfied. Indonesia holds a
competitive advantage in the energy sector, in the mining of crude oil and
petroleum gas. Indonesia has an abundance supply of these natural resources
which they are able to export to other countries like the United States and
China. Indonesia has the ability to produce oil, petroleum and coal at a faster
and more efficient rate than other countries which gives it a competitive
advantage because it can produce and extract these products with no loss and
trade it for products, goods or services they need and are not capable of
producing in their homeland.