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Global Business Formative Assigment
Global Business Formative Assigment
Global Business Formative Assigment
(1.) Ubaidillah (ID: 000787190) and (2.) Nadia Rachma Pratiwi (ID: 000784100)
AXA MANDIRI:
A JOINT VENTURE BETWEEN FRANCE AND INDONESIA
Introduction
According to Peng (2016), an International Business can be defined as a business that is
conducted through cross-border economic activities abroad. This type of business also comes
in several forms, such as import and export, licensing, franchising, strategic partnerships, joint
venture, and foreign direct investment (FDI). Expanding a certain business to a different
country would certainly be a next-level business due to the fact that there are more things to
consider than doing business locally, such as considering marketing strategies in accordance
to the culture that we are accustomed to. But once we “go global”, there are other strategies
that must be put in mind, such as country culture, politics, and many more. In this paper, the
authors will analyze an international joint venture, AXA Mandiri, formed by two companies
from France, a developed country, and from a developing country, Indonesia. A joint venture
(JV) is a business agreement which parties agree to come and develop, for a certain time, a
new diverse business unit with new assets by contributing equity (Burke, 2017). The JV is
mutually beneficial and separated legally from the two parties, but they still have control over
it.
Based on World Bank Report of “Ease Doing Business” Index (2018), Indonesia is ranked 73 from 190
countries in the world. This is quiet an improvement from 2015, which was ranked 109 in the ease of
doing the business. This indicated that currently doing business in Indonesia has become quite easier
than previous year. There is a decrease in the time needed for registration in the Ministry of
Manpower, access to credit registry also improved, and taxes payment are currently done by online
system (HSBC, 2016).
As of 2019, Indonesia is the ranked 4 th most populous country with 268,524,648 number of people.
Indonesia is currently the 18th largest economy in the world with an outstanding economic growth
(Indonesia-Investment, 2016) and their GDP is projected to be the fourth largest in the world (KPMG
Siddharta Advisory, 2016). Despite their stable economic growth, their healthcare system is found to
be a challenge in still inadequate. Their public hospitals are not up to standards, while their private
hospitals provide excellent care quality but at a cost (Allianz Worldwide Care, n.d.).
Due to a number of opportunities listed above, it proves several reasons as to why the international
joint venture was important. First of all, it is in order to get access to additional capability or capacity,
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access to other customers and markets, share operating risks, costs, and investments, and combine
in terms of banking and insurance skill as well as brand from both companies.
86
78
71
68
63 62
46 48 48
43
38
14
France Indonesia
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2. Indonesia (Host Country)
Despite the fact that Indonesia is ranked 73 for ‘Ease of Doing Business Index’, their rank for starting a
business is relatively low, which is ranked 134 out of 190 countries (World Bank Group, 2018) and
enforcing contracts rank is even lower, which is 146. Indonesia is considered to have complicated
regulations, restrictions, along with complex bureaucracy. Due to the low rank as well, businesses
might have difficulty entering the market (KPMG Siddharta Advisory, 2016).
Conclusion
In short, AXA Mandiri is a joint venture joining great business strengths from a multinational company.
AXA, which has expertise in insurance industry and from an Indonesian national company has
strength in banking industry and has experience, knowledge and network. Its combined strength can
be beneficial to explore Indonesian market which has a huge potential in insurance business.
References
Allianz Worldwide Care. (n.d.). Healthcare in Indonesia. Retrieved February 19, 2019, from
https://www.allianzworldwidecare.com/en/support/health-and-wellness/national-healthcare-
systems/healthcare-in-indonesia/
AXA Mandiri Financial Services. (2017). AXA Mandiri Financial Services Annual Report. Jakarta.
Retrieved from https://www.axa-mandiri.co.id/wp-content/uploads/2018/05/Annual-Report-AMFS-
2017.pdf
Burke, P. Y. (2017). Joint Venture Technical Career Survival Handbook: 100 Things You Need to
Know. Academic Press.
French Insurance Federation. (2017). The French Insurance Market. https://doi.org/10.1007/978-1-
349-18397-5_9
Hofstede Insights. (n.d.). Country Comparison: Indonesia and France. Retrieved February 19, 2019,
from https://www.hofstede-insights.com/country-comparison/france,indonesia/
HSBC. (2016). Global Business Guide: Indonesia. Retrieved February 19, 2019, from
https://www.business.hsbc.uk/en-gb/countryguide/indonesia
Indonesia-Investment. (2016). Indonesian Economy Structure. Retrieved February 19, 2019, from
https://www.indonesia-investments.com/id/budaya/ekonomi/ikhtisar-struktur-ekonomi/item251
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KPMG Siddharta Advisory. (2016). Insurance in Indonesia: Opportunities in a Dynamic Market.
Jakarta. Retrieved from https://assets.kpmg/content/dam/kpmg/id/pdf/id-ksa-insurance-in-
indonesia.pdf
Peng, M. W. (2016). Global Business (Internatio). Boston: Cengage Learning.
World Bank Group. (2018). Doing Business 2019: Indonesia. Retrieved from
http://www.doingbusiness.org/content/dam/doingBusiness/country/i/indonesia/IDN.pdf