1.

Introduction PT Indofood

PT Indofood CBP Sukses Makmur Tbk. (formerly PT. Indofood Sukses Makmur Tbk,
PT Gizindo Primanusantara, PT Indosentra Pelangi, PT Indobiskuit Mandiri Makmur,
and PT Ciptakemas Abadi) is a manufacturer of various types of food and beverages
based in Jakarta, Indonesia. The company was founded in 1990 by Sudono Salim
under the name Panganjaya Intikusuma which in 1994 became Indofood. The
company exports its food ingredients to Australia, Asia and Europe.

PT Indofood CBP Sukses Makmur Tbk. Is one of the leading instant noodle and
processed food company in Indonesia which became one of the branch companies
owned by the Salim Group.

The products produced by the fifteen factories have been thoroughly standardized,
including raw materials, parameters processes, machinery/equipment, manpower
(labor), and finished goods. The standards that apply in all of these factories have
been certified by SGS through International Standard Operation (ISO) certification
including PT Indofood CBP Sukses Makmur Tbk. In addition, PT Indofood CBP
sukses Makmur Tbk. Also has a Hazard Analysis Critical Certificate control Point
(HACCP) and Halal Certificate that applies to all international products. On March
21, 1998 PT Indofood CBP Success Makmur Tbk. Obtained ISO 9001 version quality
management certificate submitted in Jakarta on March 3, 1999. Then on February 5
2004 PT Indofood CBP Sukses Makmur Tbk. Obtained ISO certification 9001:2000
(ISO 9001 version 2000) from the accreditation body SGS International of Indonesia.
This is shown through the slogan contained in the logo
Indofood “The Symbol of Quality Foods” Quality” which contains consequences,
only quality products are generated. Quality products are not only made from selected
raw materials, but processed hygienically and meet the elements of nutritional content
and lawful.

Vision and Mission of PT Indofood CBP Sukses Makmur Tbk.

Behind the success and development that has been achieved or achieved, PT Indofood
has a vision and mission including :

Vision :
The Leading Consumer Goods Company

Mission :
 Continuously Innovating, focusing on Consumer needs, producing great
Brands with good Performance
 Creating quality products that are loved by consumers
 Continuously improve resources, processes and technology
 Focus on the welfare of society and the environment in a sustainable manner

In addition to its vision and mission, PT Indofood has values that include discipline as
the basis of the company’s way of life, the company conducts business with integrity,
the company treats business stakeholders.
 Not to forget the purpose of the establishment of PT Indofood, several objectives have
been mentioned by PT Indofood CBP Sukses Makmur Tbk. Bandung includes
expanding the business field continuously through the field of internal business and
strategic business development, reducing transportation costs, always improving
employee welfare, supplying other areas that always lack supplies of goods, and
participating in environmental conservation and improving community welfare.

Company Logo

The logo uses two basic colors, namely red and blue, wit Branch h graphic imagery of
letters and colors. Red symbolizes the spirit, and blue represents Indonesia's
geography as an archipelagic country.
Figure 1.1
Logo of PT Indofood CBP Sukses Makmur Tbk. Bandung

2. External Environmental Analysis

a. Political, Legal and Govermental Forces

Political
1) Opportunity: One of the elements in the political force is tax
guidelines, where following the tax guidelines issued by the
government can provide opportunities/incentives/reliefs for companies
as has happened in 2015, where on August 3, 2015, the President of the
Republic of Indonesia signed PP 56/2015 concerning “Reduction of
Income Tax Rates for Domestic Entity Taxpayers in the Form of a
Public Company”

2) Threat: Labor regulations are also an element of the political force, PT

Indofood respects human rights and implements labor practices that are
in line with the Manpower Act and other regulations that apply in
Indonesia. This commitment is stated in company regulations and
CLAs which are regularly updated and communicated to employees.
PT Indofood also provides Freedom of Association and Collective
Labor Agreements. All employees have the freedom to associate and
participate in trade unions of their choice. However, in the current
situation which is not conducive between workers and the company,
this policy can be a threat to the company if it is misused by workers.
Legal
1) Opportunity : PT Indofood's governance policies, prepared based on
the prevailing laws and regulations in Indonesia,
The Company's Articles of Association (“AD”), as well as GCG
principles that prioritize the following aspects:
 Transparency, with transparency making it easier for
shareholders, creditors and other stakeholders to make
decisions.
 Accountability, is a necessary condition for achieving
sustainable performance. the company must be managed
properly, measurably and in accordance with the interests of the
company while taking into account the interests of shareholders
and other stakeholders.
 Responsibility, the Company can be responsible for the
community and the environment so that long-term business
continuity can be maintained and be recognized as a good
corporate citizen.
 Independence, an independently managed company with a
balance of power,
 In this balance of power, no company organ dominates each
other and cannot be intervened by other parties.
 Equality, the Company must always pay attention to the
interests of shareholders and other stakeholders based on the
principles of fairness and equality.

2) Threat: Indicated of Violating Anti-monopoly Law The company

controls from upstream to downstream. Indofood provides basic
ingredients, processing into food, distribution to trading. Second, the
dominant position. Indofood's dominant market share consists of 75%
instant noodles, 66.7% wheat flour, 60% cooking oil, 50% industrial
margarine, and 55% snacks. Indofood is suspected of restricting the
supply produced by its subsidiaries to potential competitors. This is
detrimental to competitors and limits other business actors. Sixth,
unhealthy market control that creates monopolistic practices, including
fraud in determining the price of goods or services.
Govermental Forces
1) Opportunity: Participate in the Food Estate Program Indofood helps
develop a 1,000-hectare food estate area in Humbang Hasundutan
Regency, North Sumatra Province, with funding from the Ministry of
Agriculture's State Budget for an area of 215 ha and 785 ha from the
private sector. PT. Indofood Sukses Makmur acts as an off taker for the
absorption of farmers' production and is able to provide seeds,
fertilizers, and other agricultural production facilities. The enactment
 of the Employment Creation Law and the existence of the Job Creation
Law will increase investment and create many job opportunities.

2) Threat: Halal Certification The Biggest Challenge for MSME Partners

For Indofood, producing halal food and beverages and halal food and
beverage ingredients is not a problem for the company. Indofood now
even has production plants in Saudi Arabia, Syria, Yemen, Egypt,
Morocco, to Nigeria. The challenge is for Indofood's MSME Partners.
How to make their products halal certified. There are tens of thousands
consisting of 18 national associations. talk about halal certification, not
only about food products. However, it also includes how to cook it,
choosing the raw materials, to the equipment used.
Technological Forces
1) Opportunities:
 All product sales of PT. Indofood in Indonesia is coordinated
and grouped which is located close to the market and is
supported by information technology connected to satellite that
allows the company to monitor the sales and inventory of every
product sold in the local market.
 The number of human resources based on information
technology competencies are well trained
 Availability of Internet facilities to facilitate investors in
monitoring the development of the company.

2) Threats:
 Limited authority in resource management
 Lack of utilization of information technology services that have
been developed.
 Work unit integration has not been comprehensive
Competitive Forces
1) Opportunity: Cooperating with other companies PT. Indofood Sukses
Makmur Tbk cooperates with several appointed suppliers for the
procurement of raw materials and other supporting materials. As for
the suppliers appointed for the procurement of raw materials and
production support materials, including Bogasari Flour Mills, Salim
Ivomas, for the raw materials for spices, they appointed Food
Ingredients Development.

2) Threat: Aggressive competitor advertising Marketing activities carried

out by PT. Indofood to sell its products is quite intensive and
integrated. Moreover, there are many competitors that resemble the
products of PT. Indofood is in the instant noodle business line with
aggressive advertising, for example, Mie savory from Wingsfood.
https://www.coursehero.com/file/74624624/Analisis-Lingkungan-Eksternal-PT-
Indofooddocx/
3. Industry Attractiveness

A. Market size and project growth rate.

Unfortunately we didn’t have any data how much the growing rate for the
noodles, flour, branded cooking oils and margarine, snack foods, and
children’s foods industry. But we could make an assumption that the growth
rate for the industry is almost the same with the market leader projections.
Indofood has projected that demand for the noodle in market is about 3
percent. For the other industry, since it was a big and fast growing industry
there are still attractive.

B. The intensity of the competition

In Indonesia, we know that there were already many players on food industry
appear in the market. The industry attractiveness for the noodle industry is
 getting to be weaker. Many new competitors in the market could gain bigger
and bigger market share than before. Many players are trying to launch their
new product with different taste and different price. There are over 200 noodle
brands in the market today. For the other products (Flour, Branded cooking
oils and margarine, Snack Foods, and Children’s Foods) the players is still
small. In flour industry, there were only three big players in Indonesia. More
challenge perhaps in snack and children food. For the snack food, the intensity
of competition will increase because there are some growing numbers of local
player. In children food industry the new player would come from
international producers.

C. Emerging opportunity and threat

Noodles, flour, branded cooking oils and margarine, snack foods, and
children’s foods industry in Indonesia is very attractive. Recent data shows
that only 50 million Indonesian people that consume noodle. Indonesia has a
great number of people which is about 200 million people mean that there are
still many potential consumers to be served. Consumer’s purchasing power in
Indonesian is getting better also after the crisis. However this potential
opportunity is also come up with the potential threat for instance the
increasing price for raw material. This condition also happens in other
industry.

D. The presence of cross industry strategic fit

It’s more attractive for the industry to pursuing related diversification. There
are more industry value chain and resource requirement in many business that
match up with the company operations. Noodles, flour, branded cooking oils
and margarine, snack foods, and children’s foods in some occasion are having
similar value chains. Each of them can support others.

E. Resource requirements.
Most of the noodle producers in Indonesia dint have their own resource
requirements. Material for noodles, flour, branded cooking oils and margarine,
snack foods, and children’s foods still have to import from another country.

F. Seasonal and cynical influences

Industry buyer demand for Noodles, flour, branded cooking oils and
margarine, snack foods, and children’s foods is considerable as steady year to
year. Changing demand in some product like noodle usually could be
predicted before (such as increasing buying demand in Ramadhan month)

G. Social, political, regulatory and environmental factors.

There are some concerns with the government rule about monopoly. Another
problem is the price of fuel is increase and the side effect from the increasing
fuel is delaying the distribution.

H. Industry profitability
Historically the profitability of noodles, flour, branded cooking oils and
margarine, snack foods, and children’s foods industry of is stable. From the
indofood data we could learn that the changes of profitability usually around
5%.
 http://journals.ums.ac.id/index.php/benefit/article/download/1270/834

4. Internal Environment Analysis

Internal factors, which come from within the company environment such as strengths
and weaknesses include:
1) Strength consists of:
 Expertise in Indonesian flavors
 Wide distribution range
 Well-known brands
 Good quality of human resources
 Many awards and rewards obtained

2) Weaknesses consist of:

 Too many brands issued
 Too many flavor innovations released
 Unmet market demand
 Products that are indistinguishable from competitors
 Inventories of raw materials are still partially dependent on imports

https://www.jptam.org/index.php/jptam/article/download/1310/1154

Organizational structure of PT Indofood CBP Sukses Makmur tbk. :

5. Resources: Tangible Resources & Intangible Resources

Tangible Resources

Intangible Resources

Intangible assets is measured on initial recognition at cost. The cost of

intangible assets acquired from business combinations is initially recognized at
fair value as at the date of acquisition. The useful life of intangible assets are
assessed to be either finite or indefinite.
Intangible assets with finite useful life
Following initial recognition, intangible assets with finite useful life are carried
at cost less any accumulated amortization and accumulated impairment loss, if
any. Intangible assets with finite life are amortized over the economic useful
life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortization period and the amortization
method for an intangible asset with a finite useful life are reviewed at least at
each financial period end.

Intangible assets with indefinite useful life

Following initial recognition, intangible assets with indefinite useful life are
carried at cost less any accumulated impairment loss. Intangible assets with
indefinite life are not amortized. The useful life of an intangible asset with an
indefinite useful life is reviewed annually to determine whether the useful life
assessment continues to be supportable. Otherwise, the change in useful life from
indefinite to limited is carried out prospectively.

Intangible assets with indefinite life is tested for impairment annually and when
circumstances indicate that the carrying amount may be impaired.

1. Leases

The determination of whether an arrangement is, or contains, a lease is

based on the substance of the arrangement at the inception date. The
arrangement is assessed for whether fulfillment of the arrangement is
dependent on the use of a specific asset or assets or the arrangement
conveys a right to use the asset or assets, even if that right is not
explicitly specified in an arrangement.

Finance Lease - as Lessee

A lease is classified as a finance lease if it transfers substantially all the
risks and rewards incidental to ownership of the leased assets. Such
leases are capitalized at the inception of the lease at the fair value of
the leased asset or, if lower, at the present value of minimum lease
payments. Minimum lease payments are apportioned between the finance
expense and settlement the lease liability so as to achieve a constant
rate of periodic interest on the remaining balance of liability. Finance
expenses are charged directly to profit or loss.

If there is reasonable certainty that the lessee will obtain ownership by

the end of the lease term, then the leased assets are depreciated over
their useful lives. If not, then the capitalized lease assets are depreciated
over the shorter of the useful life of the asset or the lease term.

Operating Lease - as Lessee

 A lease is classified as an operating lease if it does not transfer
substantially all the risks and rewards incidental to ownership of the
leased asset. Therefore, the related lease payments are recognized as
expense in the current period operations using the straight-line method
over the lease term.

Operating Lease - as Lessor

A lease where the Group does not transfer substantially all the risks and
rewards of the ownership of the asset are classified as operating leases.

2. Deferred Charges

Certain expenditures consisting primarily of costs and expenses relating

to land rights renewal cost and for cost of software systems, which
benefits extend over a period of more than one year, are deferred and
amortized over the periods benefited using the straight-line method.
These expenses are presented in “Deferred Charges - Net” account in the
interim consolidated statements of financial position.

3. Borrowing

Costs Borrowing costs that are directly attributable to acquisition,

construction or production of a qualifying asset, if any, are capitalized
as part of the cost of the related asset. Otherwise, borrowing costs are
recognized as expenses when incurred. Borrowing costs consist of
interests and other financing charges that the Group incurs in connection
with the borrowing of funds.

Capitalization of borrowing costs commences when the activities to

prepare the qualifying asset for its intended use are in progress and the
expenditures for the qualifying asset and the borrowing costs have been
incurred. Capitalization of borrowing costs ceases when all the activities
necessary to prepare the qualifying assets are substantially completed for
their intended use.

4. Revenue and Expense

Revenue is recognized to the extent that it is probable that the economic

benefits will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration
received or a receivable, excluding discounts, rebates and value-added
taxes (VAT).
The following specific recognition criteria must also be met before
revenue is recognized:

Sale of Goods and Services

 Revenue from sales arising from physical delivery of the Group’s
products are recognized when the significant risks and rewards of
ownership of the goods have passed to the buyer, which generally
coincide with their delivery and acceptance.

Service income is recognized when the service is provided. Freight

revenue from time charter is recognized on a time-apportioned basis over
the period of the charter and revenue from voyage charter is recognized
upon completion of cargo loading. Interest Income/Expense For all
financial instruments measured at amortized cost, interest income or
expense is recorded using the effective interest rate (EIR), which is the
rate that exactly discounts the estimated future cash payments or receipts
over the expected life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the financial asset or
liability.

Rental Income
Rental income is recognized on a straight-line basis over the lease terms.

Expenses
Expenses are recognized when these are incurred (accrual basis).

5. Taxation

Final Tax
Tax regulation in Indonesia determined that certain taxable income is
subject to final tax. Final tax applied to the gross value of transactions
is applied even when the parties carrying the transaction recognizing
losses.

Final tax is scoped out from by PSAK No. 46. Therefore, the Group
has present all of the final tax arising from interest income as a
separate item in interim consolidated statement of profit or loss and other
comprehensive income.

Current Tax
Current income tax assets and liabilities for the current period are
measured at the amount expected to be recovered from or paid to the
taxation authority.
Current tax expense is determined based on the taxable income for the
period computed using the prevailing tax rates.

Underpayment/overpayment of income tax are presented as part of “Tax

Expense - Current” in the interim consolidated statements of profit or
loss and other comprehensive income. The Group also presented
interest/penalty, if any, as part of “Tax Expense - Current”.
Amendments to tax obligations are recorded when a tax assessment letter
is received or, if appealed against, when the result of the appeal is
determined.

Deferred Tax
Deferred tax assets and liabilities are recognized using the liability
method for the future tax consequences attributable to differences
between the carrying amounts of existing assets and liabilities in the
financial statements and their respective tax bases at each reporting date.
Deferred tax liabilities are recognized for all taxable temporary
differences and deferred tax assets are recognized for deductible
temporary differences and accumulated fiscal losses to the extent that it
is probable that taxable income will be available in future years against
which the deductible temporary differences and accumulated fiscal losses
can be utilized.

The carrying amount of a deferred tax asset is reviewed at the end of

each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable income will be available to allow the
benefit of part or all of that deferred tax asset to be utilized. At the
end of each reporting period, the Group reassesses unrecognized deferred
tax assets. The Group recognizes a previously unrecognized deferred tax
assets to the extent that it has become probable that future taxable
income will allow the deferred tax assets to be recovered.

Deferred tax is calculated at the tax rates that have been enacted or
substantively enacted at the reporting date. Changes in the carrying
amount of deferred tax assets and liabilities due to a change in tax rates
are charged to current period operations, except to the extent that they
relate to items previously charged or credited to equity.

Deferred tax assets and liabilities are offset in the interim consolidated
statements of financial position, except if they are for different legal
entities, consistent with the presentation of current tax assets and
liabilities.

Value-Added Taxes (VAT)

Revenue, expenses and assets are recognized net of the amount of VAT
except:
i. Where the VAT incurred on a purchase of assets or services is
not recoverable from the tax office, in which case the VAT is
recognized as part of the cost of acquisition of the asset or as
part of the expense item as applicable; and
ii. Receivables and payables that are stated with the amount of VAT
included.
 The net amount of VAT recoverable from, or payable to, the tax office
is included as part of receivables or payables in the interim consolidated
statement of financial position.
6. Provisions

Provisions are recognized when the Group has a present obligation (legal
or constructive) where, as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate of the amount of the
obligation can be made.

Provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate. If it is no longer probable that an outflow of
resources embodying economic benefits will be required to settle the
obligation, the provision is reversed.

Provision for asset dismantling costs is estimated based on certain

assumptions and carried at fair value based on applicable discount rates.

7. Employees Benefits

In accordance with PSAK No. 24, the Group recognizes provision for
employee service entitlement benefits in accordance with Labor Law No.
13/2003 dated March 25, 2003 (the “Labor Law”). Under the Labor
Law, companies are required to pay separation, appreciation and
compensation benefits to their employees if the conditions specified in
the Labor Law are met.

For the Company’s Bogasari Division and certain Subsidiaries, namely,

IAP and SIMP and its certain Subsidiaries, which already maintain and
operate formal pension plans for the benefit of their employees,
additional provisions for the estimated liabilities for employee service
entitlement benefits are made on top of the benefits provided under their
respective pension plans, if necessary, in order to meet and cover the
minimum benefits required to be paid to employees under the Labor
Law.

The amounts of the above-mentioned required provisions are estimated

based on the actuarial calculations using the Projected Unit Credit
method.

Re-measurements, comprising of actuarial gains and losses, are

recognized immediately in the interim consolidated statement of financial
position with a corresponding debit or credit to retained earnings through
other comprehensive income in the period in which they occur. Re-
measurements are not reclassified to profit or loss in subsequent period.
 Past service costs are recognized in profit or loss at the earlier between:
i. the date of the plan amendment or curtailment; and
ii. the date the Group recognizes related restructuring costs.
Net interest is calculated by applying the discount rate to the net
employee benefits liability. The Group recognizes the following changes
in the net employee benefits liability under “Cost of Goods Sold”,
“General and Administration Expenses” and “Selling and Distribution
Expenses” as appropriate in the profit or loss:
i. Service costs comprising current service costs, past-service costs,
gains and losses on curtailments and non-routine settlements, and
ii. Net interest expense or income.
Gains or losses on the curtailment or settlement of a defined benefit
plan are recognized when the curtailment or settlement occurs. Employees
Benefits (continued) A curtailment occurs when an entity either:
i. Is demonstrably committed to make a significant reduction in the
number of employees covered by a plans
ii. Amends the terms of a defined benefit plan so that a significant
element of future service by current employees will no longer
qualify for benefits, or will qualify only for reduced benefits.

8. Transactions with Related

Parties The Company and Subsidiaries have transactions with related

parties, as defined in PSAK No. 7 (Revised 2010) as follows:
i. A person or a close member of that person’s family is related to
the Group if that person:
(i.1) Has control or joint control over the Company;
(i.2) Has significant influence over the Company; or
(i.3) Is a member of the key management personnel of the
Company or of a parent of the Company.

ii. An entity is related to the Group if any of the following

conditions apply:
(ii.1) The entity and the Company are members of the same
group (which means that each parent, subsidiary and fellow
subsidiary is related to the others);
(ii.2) One entity is an associate or joint venture of the other
entity (or an associate or joint venture of a member of a group
of which the other entity is a member);
(ii.3) Both entities are joint ventures of the same third party;
(ii.4) One entity is a joint venture of a third entity and the other
entity is an associate of the third entity;
 (ii.5) The entity is a post-employment benefit plan for the benefit
of employees of either the Company or an entity related to the
Company. If the Company is itself such a plan, the sponsoring
employers are also related to the Company;
(ii.6) The entity is controlled or jointly controlled by a person
identified in (i); or
(ii.7) A person identified in (i.1) has significant influence over
the entity or is a member of the key management personnel of
the entity (or of a parent of the entity).
(ii.8) The entity, or any member of a group of which it is a
part, provides key management personnel services to the reporting
entity or to the parent of the reporting entity

Significant transactions and balances with related parties are

disclosed in the relevant Notes herein.

Unless specifically identified as related parties, the parties

disclosed in the Notes to the interim consolidated financial
statements are third parties.

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6. Core Competencies

In these decades PT. Indofood Sukses Makmur. Tbk (Indofood) has transformed into
a Total Food Solution company with operational activities covering the entire
production process, from the production and processing of food raw materials to the
final product available on the shelves of retail traders. Now Indofood is known as an
established and leading company in every business category. In carrying out its
operational activities.

Indofood benefits from the robustness of its business model which consists of 4
complementary strategic business groups, including:

1) Branded Consumer Products (CBP). Its business activities are carried

out by PT Indofood CBP Sukses Makmur Tbk (ICBP), whose shares
are listed on the Indonesia Stock Exchange (IDX) since October 7,
2010. ICBP is one of the leading packaged food manufacturers in
Indonesia that has various types of packaged food products. . ICBP's
various product brands are well-known and well-known brands in
Indonesia for packaged foods.
 2) Bogasari, has the main business activities of producing wheat flour and
pasta. The Group's business activities are supported by shipping and
packaging units.
3) Agribusiness. Its business activities are concentrated in Indofood Agri
Resources Ltd., which is listed on the Singapore Stock Exchange, and
its subsidiaries including PT PP London Sumatra Indonesia Tbk
(Lonsum) and PT Salim Ivomas Pratama Tbk (SIMP), which are listed
on the IDX. The Group's main business activities range from research
and development, breeding, breeding and processing of palm oil to the
production and marketing of branded cooking oil, margarine and
shortening. In addition, the Group's business activities also include the
breeding and processing of rubber and sugar cane and other crops.
4) Distribution, has the most extensive distribution network in Indonesia.
This group distributes almost all consumer products of Indofood and
its subsidiaries, as well as various third party products.
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7. SWOT Analysis