PENI has suffered from the problem of low sales level at present because it cannot produce all of Polyethylene grades in Indonesia. Furthermore, its product has been perceived as low quality Polyethylene. The tariff duty has resulted in higher Polyethylene price in the local market than in the global market. Therefore imported Polyethylene both legal and illegal, still exists in the Indonesia market.



Chandra Asri, a new entrant, will begin to produce Polyethylene and Ethylene as part of its product range in 1995. And as a well-integrated olefin center, Chandra Asri will be a strong and direct competitor to PENI.

The vision and mission of PENI are market leadership and profitability. In order to achieve that, PENI should focus its strategy on solving and anticipating the sales and competition problems. The strategy is formulated based on the results of economic, environment analysis, industry analysis and SWOT analysis.



Economic analysis indicates a large potential market in Indonesia while on the other side, the global market has been oversupplied with Polyethylene. Industry analysis shows that:

-PENI has a strong position vis-?-vis potential new entrants -PENI has a strong power over suppliers and substitutes -PENI is weaker than competitors

-Buyers will be strong if there are competitors



The SWOT analysis for PENI :

-Strengths are government support, British Petroleum support and first entrant position

-Weaknesses are less integrated and low product-market fit -Opportunities come from the large potential market

-Threats come from oversupplied global market and Chandra Asri





Based on the analysis, the short-term strategy should focus on improving sales by introducing product development, improving quality, extending Polyethylene grades, and selling at competitive price. The long-term strategy will aim at a more competitive position for PENI by defensive strategy and backward integration. Apart from that, PENI will exploit more opportunity by developing new market segments and forward integration. In the short term and long term, lobbying government will support both strategies.



Research location: PT PENI

Supervisor: Hadi Satyagraha, PhD.

Accepted : December 1993