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Allice Sharon Valentine & Edbert Mulyadi

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PT. Modern Internasional is acquainted with Japan͛s FUJI FILM for it is known as its sole distributor in
Indonesia since 1971. For over than 50 years, PT. Modern International has taken Fuji Film to enter Indonesian
market through PT. Modern Foto Film Company and become the market leader in the of photo printing and photo
equipment industry.
Economic condition throughout 2008 ended by global financial crisis that affected PT. Modern Internasional
and also most companies worldwide resulted in decreasing of customer purchasing power and caused a lot of
industry to suffer in very tight market liquidity. As the technology keeps on developing each day, the decreasing in
Film sales has been something which is inevitably unavoidable. Within the past 3 years, filmproducts demand has
dropped up to 70%. Even though the Company and its subsidiaries were good in maintaining its sales and
distribution performance, it just turned out the sales were leading to suffer the declining sales of conventional
photographic products, such as: film, film camera, and so on. Shown below are the net sales of PT. Modern
Internasional for the recent 3 years:


  
 
  
Rp1,000.00
Rp800.00
 
Rp600.00  
 
Rp400.00
Rp200.00
Rp-
! ! !

To respond the situation and even improving the Company, Board of Commissioner supported the
management to put a strategic step in order to be able to enhancing sales volume and reducing the operational
expenses. With this new vision, one of the Company͛s subsidiaries, PT. Modern Putra Indonesia is approaching on 7-
Eleven. This resulted the Company to sign the Letter of Intent with 7-Eleven, Inc., United States, which known as the
world͛s biggest retail company with convenience store concept.
In respect for its core business line, PT. Modern Indonesia also tried to state that they are able to withstand
even continue even if the core business has been declining due to digitalization. Not only expanding their business
into retail field, they also transforming from conventional photography business to graphic art, medical imaging and
multifunction copier machine Ricoh. The Company had planned to convert retail photo store of Fuji Image Plaza into
retail convenience store, 7-Eleven in the past 2009. The new innovation and strategic approach is to put the existing
photo business as a part of retail 7-Eleven, which is positioned to focus on fast food, beverages and other items of
convenience.

Change Management of Modern Internasional

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Allice Sharon Valentine & Edbert Mulyadi

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With the bombastic impact of social networking sitesand rapid growth of internet-driven application in
Indonesia, it has changed the way people exchanging information through images (no longer paper-based
transaction through mailing or any other printed materials).
Convenience stores are open 24 hours a trend, especially big cities like Jakarta.
w ')'
The economic crisis in 1998, which resulted in some groups of modern business collapses.These also
influence some sectors. Decrease in Film sales has been inevitably unavoidable, within the last 4 years film
products demand has dropped by 70%. The Company͛s sales decrease in 2008 actually occurred in electronics
sales for export market which was carried out by the Subsidiaries. This decline that reached 53% was cause by
decline of export value and the termination of several order contracts due to global crises͛ impact.
w '* 
During the internet-driven age in Indonesia, it leads the rapid growth of internet users in Indonesia
shown below1:
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2,000,000 206,264,595 1.0 % US$ 570
2007 20,000,000 224,481,720 8.9 % US$ 1,916
2008 25,000,000 237,512,355 10.5 % US$ 2,238
2009 30,000,000 240,271,522 12.5 % US$ 2,329
Therefore, this has caused changes in Image processing. Conventional photo printing industry is displaced by the
existence of digital imaging products.
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w Competition
Through the rapid innovation by the photo imaging industry, PT. Modern Indonesia is challenged by
more competitors they didn͛t expect before. Despite the previous competitor, now the Company is also standing
against the new gadget with digital imaging capabilities such as mobile phone and Smartphone. Their new
competitor will also include: Nokia, Blackberry, Sony-Ericson,
w Customer
Strong preference from the customer has caused the Company to lose more and more sales during the
past 3 years.

1
Note: Per Capita GDP in US dollars, source: United Nations Department of Economic and SocialAffairs.
Change Management of Modern Internasional
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Allice Sharon Valentine & Edbert Mulyadi

 

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w Factories that used to make paper or film have lost their economic value and there is no strategy or
management fad that can change this fact. With the decreasing 8.5% net sales in 2008, continued with more loss
around 21.6% from net sales, PT. Modern Internasional at risk in generating profits in daily basis.
w PT. Modern Internasional core business made most of the profits on selling film and printing pictures. With the
rise of digital imaging, these signs and the benefits of being vertically in
tegrated lost its value.
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1) The Objective of the Transformation
a. To achieve the vision of KEEP FIGHTING & WIN Realize, by the the 6 R Strategy of: Repositioning Business,
Reinvent Business, Reengineering Business Process, Right Sizing and also Resource Allocation.
2) )')  -()(( )( ' -()((   )) 
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) (graphic art, medical imaging and multifunction copier machine RICOH)

*( 
)* (7-
eleven).
3) Action of Change:
a. Conducting the sale of its investment in PT Honoris Industry, one of its Subsidiaries
b. Get licenses or offers master franchises for the operation of its 7-Eleven® in Indonesia.
c. Increasing investment in shares of PT Modern Putraindonesia, one of the Subsidiary which is engaged in
retail business development in order for 7-Eleven.
d. Expanding the 7-Eleven business and and launching more stores.
e. Transforming in company͛s culture and embedding the new culture into new integrated KPI (Key
Performance Indicator) and talent management.
f. Train employees of photo printing specialists become employees of convenience stores, with customer
service orientation.
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Because the transformation of PT. Modern Indonesia is just happening last year, so there are no official
statement from the Company which can be used as to confirm its performance. The tangible growth can be seen by
the growth of 7-eleven stores launched in Jakarta. At present, from its first store which was launched in 7 November
2009, 7-Eleven already operating in 13 stores around Jakarta area. The expansion will continue by opening more
store in the big cities of Indonesia such as: Bandung, Semarang andSurabaya.
  
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(( ´To establish a sense of urgency, the leader of PT. Modern Internasional
 '  communicate this urgency through its annual management report to PT. Bursa Efek
 Indonesia
! 

)  ))  ´To increase the strength of doing the change, the company cooperates with Fuji Film
'
*)) and also 7-Eleven Inc.

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Allice Sharon Valentine & Edbert Mulyadi

  c.*) 
.)() ´Develop Vision, ͞Keep Fighting and Win͟

(
  ´Create new strategy, 6R: Repositioning Business, Reinvent Business, Reengineering
 Business Process, Right Sizing and Resource Allocation.
´Changed the company͛s focus of business to become in Imaging and Retail industry
 
)'
)  ´To communicate to the entire employee about the change of vision and strategy of
'
 .)() the company, the management of PT. Modern Internasional use the company͛s
 website and internal media.
´Create an integrated talent management aligning to company͛s new target and
vision through human resources enrichment programs and KPI.
 ) *
0 ´Entering new business:
*
(ñ') Photo printing ù Industrial imaging
Retail ù Convenient store (minimarket) + dine in facilities (as added value)
´Improving new development on new digital imaging: Photo Book
´Providing new services: candid camera to amusement park or water park like
Snowbay, TransKalla, Waterboom, etc
  
) ( ´Opening more store of 7-Eleven
)( ´Converting Fuji Image Plaza, Fuji Digital Imaging outlets position by attaching the Fuji
counter inside the 7-Eleven store
 
(*)
) 
)( ´ Companies must continue to strengthen their strategy by making continuous

')  improvements to the company's mission vision can work well by all members of the


  company, which in the end the company to continue to expand our business with
their retail expansion
  ñ')  ´ Human Resource Development in training the existing employee, from photo


'() printing specialist to digital imaging specialist and food & beverage specialist
'*

As in the case above, the image processing industry is a very promising industry, but with the rapid
technological development, the industry suffers a huge decline. As an example of the Modern Group as one
company that has a major role in image processing industrynever think that the industry will experiencesuch a huge
loss because at present almost from the majority of people who use digital images that can be stored on a digital
camera or their mobile phone and directly distribute through the internet connection.
For a company Modern Group Realize this and they do change their business from the retail business.
Changes made by the company is significant enough, the image-processing businesses into a business that they live
now, is to create a retail and convenience stores is not easy, also because the company compete with other stores in
Singapore, not only They also must change the culture Initially the company focused only on the image processing
business which currently focuses on food & beverage. But we realize the Modern Group by making some
differentiation in the retail food they provide, beverage, and facilities in the form of tables and chairs provided for
customers if they want to eat on the spot, too. Services provided by the retailer that is different from the services
provided by other shops.
From the above analysis we can conclude every company That should be sensitive to the changes to follow
as development time, because if the company is still running the same strategy with the development time, the
company will from having a saturation point, the industry Nowhere is no longer in demand by the public entrance.

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Allice Sharon Valentine & Edbert Mulyadi

Changes made by an industry also have to understand the market, so the company will continue to maintain and
benefit from the company.

  

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Considering the changes happened in the core business of PT. Modern Internasional and the analysis done
regarding to the case, our group are recommending some ideas:
´ PT. Modern Internasional should put its best effort to get the license from the government. By having the
license, the Company can generate more profits by selling 7-Eleven franchise to the other third parties. This
expansion will leads to success because at its principle, franchise has prospectus benefit such as: Leveraged
business format for greater expansion and revenues, Consistency in outlets, knowledge of local markets,
shared financial and more working capital
´ To ensure the growth of 7-Eleven is toward a good making money units, management of PT. Modern
Internasional should optimize the trend of Indonesian customer which longing for a good place to sit around
conveniently. By consistently use aggressive marketing campaign, the Company will be able to attract more
new customers to get in. Moreover, the Company should also put more effort to empower their employees by
facilitating them with flatter hierarchies, less bureaucracy, and involve a greater encouragement to increase
their willingness to give up the best.
´ In this early stage of changing itself, we are recommending PT. Modern Internasional to incrementally
transform to the model of twenty-first century organization, as follows:

 
   
wNon bureaucratic, with fewer wDepend on many performance wExternally oriented
rules and employees. information systems, providing wEmpowering
wLimited to fewer levels data on customers especially w>uick to make decision
wOrganized with the expectation wDistribute performance data wOpen and candid
that management will lead, widely wMore risk tolerant
lower-level employees will wOffer management training and
manage support systems to many
wCharacterized by policies and people
procedures that produce the
minimal internal
interdependence needed to
serve customers

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‘ Internet usage and population statistics. Available online.http://www.internetworldstats.com/asia/id.htm.
‘ Kotter, John. Leading Change. Harvard Business School Press.
‘ Transformed The Core Business. PT. Modern Internasioanal Annual Report 2008.
‘ Fortune Indonesia Volume 5, 31 October 2010.

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Allice Sharon Valentine & Edbert Mulyadi

‘ Public Expose of PT. Modern Internasional 2008 & 2009.

***

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