FORMULATIONS BUSINESS STRATEGY UNIT THE GENERATION OF ELECTRIC POWER IN PT PEMBANGKITAN JAWA BALI (PJB)

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1 FORMULATIONS BUSINESS STRATEGY UNIT THE GENERATION OF ELECTRIC POWER IN PT PEMBANGKITAN JAWA BALI (PJB) Moch. Hafid Rusli 1) and Buana Ma ruf² ) Master s Program in Management of Technology, Institut Teknologi Sepuluh Nopember Jl. Cokroaminoto 12A, Surabaya, 60264, Indonesia 1) m.havid.rusli87@yahoo.com, ² ) buana.maruf@bppt.go.id ABSTRACTS Business plan provision of electricity years is organized to meet the government regulation Nomor 14 years 2012 About business activities of electric power supply said business electric power to public interest is conducted in accordance with the general Power plan and business plan provision of electricity. PT. Pembangkitan Jawa Bali (PT. PJB) as one of the PT. PLN (Persero) in the term electricity. Is expected to increase significantly to push and accelerate program, However this time there was some of the issues that cause the barriers or the company performance less than maximum. Limited funding, really needs to suppliers fuel, and having difficulty to ensure of continuity supply and the quality of energy his primery. The problem in the electric current is to competition capital requirement : The government opened foreign investment in the field of electricity ( 1-10mw open to unfamiliar with the local partners, above 10mw open investment amounting to 95 percent by foreigners ). This study will use the model Freed r.david and AHP.The process analytical hierarchy used for determining the weight internal and external factors strategic. Of the calculation on matrix QSPM above obtained strategy with a total value TAS (Total Attractiveness) 5,12 Selected highest score is a company to conduct an Herisontal Integration. Followed by strategy market penetration 4,36 and the last market development 3,03.That business units the generation of electricity in pt the generation of java bali continue to able to compete keyword :Strategic Management, Analytical Hierarchy Process, Business Strategy, David s Formulation Model, Power Plant. INTRODUCTION World s economic development on 2015 about to reach 3.6% up to 3.8% on Global commodities price, including oil stuck at the low level. Regionally, economic development in Asia s developing country are stable and expected to reach out 6.3% for 2015 and 2016 equilibrate China s economic flow. ASEAN Economic Society at the end of 2015 creates prospect and opportunity for economic cooperation on larger scale. Electrical industry prospect related with 20 years long term National Development Plan that explained on 5 years middle term development plan.. Long term National Development Plan batch establish on Undang-Undang Republik Indonesia Nomor 17 Years That law explain that energy and electrical power development facilities and infrastructure directed to escalate access and services for consumer toward energy One of government developing priority on is infrastructure. Investment plan for infrastructure on about to reach tril l ion rupiahs.the biggest investment al locat ing for electrical sector in the amount of 818 tril lion rupiahs. A-1-1

2 The main product of the power generation business is the Readiness of Operations and Electrical Energy of power plant units by direct delivery mechanisms to customers through transmission lines based on the sale and purchase contract stated by the EAF declare. PJB's main business is providing electricity through 6 (six) Generation Units (GU) with a total installed capacity of 6.977MW, spreading across Java Island. In addition to the generation units above, in 2014 PJB developed its power generation business by building CNG Peaker in Muara Tawar and PLTMG CNG Marine in Bawean Gresik. The utilization of CNG technology for Muara Tawar power plants that reaches 20 MMSCFD, has become the world's highest capacity. Background the establishment of pt pjb ( also pt indonesia power ), besides to anticipate competition in the field of the generation of by the existence of independent power producer ( ipp ). This research is conducted to formulate the right business corporate strategies for PT. PJB to create sustainable competitiveness in the market. The strategy formulation will be based on the model developed by Fred R. David (David, 2013) for one business division of PT. PJB, the Power Plant business This particular model has more comprehensiveness compared to other strategic formulation model. This model also has the QSPM (Quantitative Strategic Planning Matrix) analysis method that could finally recommend the right strategy for the company. METHODOLOGY This research utilized the three stages approaches to the David s strategic management model to formulate the strategy for PT. PJB. The Analytical Hierarchy Process is used to calculate the weight of each different internal and external factors. Tent (10) respondents were selected to identify the strategic internal and external factor, including their individual weighting, by using questionnaires, interviews and discussion. The respondents consist of high level management from the company, Business Unit the Power Plant, who have the compatencies and experiences in this particular business. RESULTS AND DISCUSSION The Input Stage There are three matrices used in the input stage, including External Factor Evaluation (EFE) matrix, Internal Factor Evaluation (EFE) matrix and Competitive Profile Matrix (CPM). The internal and external factors are identified through literature study, interview and discussion with company s key-personnels and experts. The weights of each factors are determined with the Analytical Hierarchy Process and the rating for each factor is acquired from the questionnaires. The EFE matrix evaluates and summarizes the information related to the external environment of drilling business like the economic situation, the socio-cultural situation, the political situation, the technology situation and also the competitive situation. By evaluating the external factors, it can be identified the factor which could become the opportunity for the company as well as the factor that could become threat. The IFE matrix evaluates and summarizes the information related to the internal environment of drilling business like the management situation, the resources situation, the financial situation, the marketing situation and also the operations situation. By evaluating the internal factors, it can be identified the factor which could become the strength for the company as well as the factor that could become the weaknesses.. A-1-2

3 For Business Unit the Power Plant, PT. PJB position is weakness compare to its main competitors which are mainly player. This is reflected in the CPM score of 3.20, the highest compare to its main competitor locally. PT. PJB is stronger mainly in the Technical Experiences factor, followed by National Reputations Table 1. Input Stage Result INPUT STAGE Business Unit Power Plant Matriks Matriks EFE CPM Matriks IFE value:2.53 value:3.20 value:2.45 The Matching Stage The Matching Stage is the stage where the process of matching between the internal and the external factors will be done. In the matching stage there are Two matrix to develop: the SWOT Matrix,and the SPACE matrix. With the Two matrix, each type of strategy will be identified and the after will be match to each other to find the common strategy that will satisfy the Two matrix. The SPACE matrix show in which quadrants For Business Unit the Power Plant are located in order to identify what kind of strategies are appropriate in accordance with two internal dimensions (financial position and competitive position) and two external dimensions (stability position and industry position). From the SPACE matrix, both For Business Unit the Power Plant are located in the aggressive quadrant, which means that PT. PJB is in excellent position to optimize its internal strength (excellent performance, knowhow, operational achievement, quality personnel, HR development) to take advantage of external opportunities available locally or regionally, to overcome internal weaknesses and to avoid external threats (Fluctuated Oil and Gas Prices, LCC Competitors, interest rate etc). The result shows that, proposed strategies to be implemented in division of PT. PJB are the intensive strategies (Horizontal integration, market development, and product development). For the case of PT. PJB however, the Horisontal integration strategies will be the most appropriate considering its high score in EFE where PT. PJB could use it strength to aliansi with ipp penetrate more the existing domestic market or develop new market in the region Table 2. Matching Stage Results Business Unit Power Plant Matching Stage Results Business Unit Power Plant SWOT Matrix SPACE Matrix Position in different matrix SO, WO, ST, WT Aggressive Quadrant Market Penetration Herizontal Integration The Decision Stage The results summarized are used to determine the right strategies of PT.PJB. Based on the discussion with PT.PJB management, the following strategies have been selected for both the Business Unit the Power Plant. Quantitative Strategic Planning Matrix (QSPM). A-1-3

4 To determine the relative attractiveness of the selected strategies above, the technique of Quantitative Strategic Planning Matrix (QSPM) is constructed. This matrix shows which alternatives are best based on the information acquired from the input stage and matching stage. The external and internal factors from the previous analysis are used to evaluate the attractiveness of each strategy. From the calculation using the QSP Matrix, for Business Unit the Power Plant, the Horizontal integration strategies appears to be the most attractive with TAS value of 5.12 followed by market Development with TAS 4.36 and product development with TAS Decision Stage for Business Unit Power Plant Selected Generic Selected strategies to be Strategies implemented Horizontal Integration 1. is by applying the 5.12 acquisition / takeover of the company and forming new businesses related relationship 2. To finding new partner to 4.36 extend market coverage 3. To build competence on new 3.03 technology to benefit from TAS value future trends The strategy to find new partner to extend market coverage for Business Unit the Power Plant is supported by the internal strenghts of PT. PJB which was quite high as shown by the EFE Score for both business division. With this strategy PT. PJB will be able to optimize their internal strenghts to reap the opportunity in the market. This strategy will require a strong commitment from the management since this strategy will take a conderable time (medium to long term) to be fruitful. relationship close lender with investor is also very important for PT. PJB. As project power plant is considered the most important activities for engineering procurement, good relationship which are supported by good performance and good results will drive clients to be more depending on PT.PJB for a quality of results (in terms of speed and quality). CONCLUSIONS AND RECOMMENDATION David s models for strategy formulation could be used to develop and to formulate Power Plant business strategy unit in PT.PJB. business unit Power Plant. Based on the results of QSP matrix, the selected strategy for Horizontal integration strategy (TAS 5.12) and the chosen strategy is to find partners and to form cooperation to open and explore new market. The main strategy are to build strong relationship with investors and lender and to increase the number of market development project new power plant to strengthen its presence in the market and to gain more market share. The identification of strategic internal and external factors in the David s model could be enhanced further by applying other statistical method like Factor Analysis. For company, David s model of strategy formulation could become one alternative in formulating business strategy in the unit power plant industry despite its limited application in the field while for A-1-4

5 academia, more research on the application of David s model in the power plant related company should be promoted to see how effective the model works in the industry On judgment QSPM was conducted model group discussion represented by several people decision-making strategic company.the recapitulation result group discussion as it seems at the table below REFERENCES David, Fred R., 2015., Strategic Management Concept & Cases, Fifteenth Edition., Prentice Hall International, Inc. Pembangkitan Jawa Bali., 2015., Achieversary (Achievement and Anniversary), PJB, Surabaya Pembangkitan Jawa Bali.,2013., Accelerating Sustainable Growth,Statistik Perusahaan Parlindungan, S. M., 2015, Formulating Corporate Strategy to Sustain The Competitiveness of PT. APX (Drilling Rig Company),ITS, Surabaya. Porter, M.E. (1980) From "Competitive advantage to corporate strategy" Harvard Business Review 65. Porter, M.E., 1985, Competitive Advantage: Creating and Sustaining Superior Performance, The Free Press, New York. Pembangkitan Jawa Bali.,2014., Annual Report 2014 Towards Global Energy Leader PLN., 2015, Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) PT PLN (Persero) PLN., 2016, Rencana Usaha Penyediaan Tenaga Listrik (RUPTL) PT PLN (Persero) Goold, M, Campbell, (1994) Corporate- Level Strategy: Creating Value in the Multibusiness Company. John Wiley and Sons, New York. Saaty, Thomas Lorie,2008. Analytical Hierarchy Process. Whaton Business School. A-1-5