PT. CIPTA PIRANTI TEHNIK (CIPTA) was established in 1984 in line with the government regulation to provide incentives for import substitution industries. CIPTA is engaged in the business of automotive component, i.e., automotive wire harness, battery cable, and gasket (see figure 1-1). Automotive has been the major market for the company while motor cycle and heavy equipment markets contribute lesser volume. As a wholly owned subsidiary of PT. ASTRA INTERNATIONAL ( ASTRA), CIPTA enjoys a captive market in the automotive sector and its share of market is more or less the same with that of ASTRA's.

As many other companies in the industry, CIPTA is technically assisted by YAZAKI CORPORATION, Japan, one of the world leading wire harness manufacturer and NIPPON GASKET CO., LTD. in gasket manufacturing. The dependency to the Principal has been significant until now as:' 'all of the product and material designs are supplied by the Principal. CIPTA had traditionally enjoyed a substantial margin since its establishment. However, in the past three years profits were declining despite the increase in sales revenue. Both external and internal factors have attributed to its performance. The competition, the power of the buyers and suppliers as well, the fluctuation of foreign exchange rates , government regulation are among other things in the external side while in the internal side it is believed that strategies have not been clearly formulated and implemented, the so called PDCA (plan - do - check - action) has not been carried out properly, the hierarchical structure and responsibility are poorly defined, which result in low productivity, inefficiency, and high costs.

The recent developments have to be anticipated carefully by the Top management in order to maintain and further strengthen the company's position in the industry. First, the ability of ASTRA's car manufacturers to out-source their local components has been made possible by the existence of new Japanese player and the Brand to Brand Complementation (BBC) scheme. That means CIPTA will lose its captive market if it cannot compete with those players. Second, with the introduction of the so called National Car in February 1996, the impact will still have to be analyzed. The best scenario will be that CIPTA supplies the TIMOR while the worst scenario win be that it will have to compete against the Koreans.



Research Location: PT. Cipta Piranti Tehnik

Supervisor: Prof. Dr. Wagiono Ismangil

Accepted on June 1994



For IPMI Internal -- Read at Library Only.