FOREIGN TRADE UNIVERSITY

HO CHI MINH CITY CAMPUS

------- *** -------

MIDTERM ASSIGNMENT

INTEGRATED INTERNATIONAL BUSINESS PLAN FOR

TH TRUE MILK’S EXPANSION INTO THE INDONESIAN MARKET

Lecturer: Ms. Nguyen Thi Quynh Nga

– Group 2 –

Name Student ID Class

Lê Thái Khánh Nhi 2211155014 K61CLC4
Nguyễn Trần Vân Khánh 2211155008 K61CLC4
Ngô Phước Hà 2212155072 K61CLC4
Nguyễn Thị Thùy An 2212155029 K61CLC4
Nguyễn Hoài An 2212155026 K61CLC4
Dương Thị Hà Giang 2212155067 K61CLC4
Chung Kiết Tường 2211155021 K61CLC4
Phan Nguyễn Quốc Anh 2211155002 K61CLC4
Trần Thị Ngọc Anh 2212155037 K61CLC4

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I. INTRODUCTION.....................................................................................................4
II. COMPANY ANALYSIS..........................................................................................4
1. History of formation and development................................................................. 4
2. Vision, mission and goals......................................................................................5
2.1. Vision............................................................................................................5
2.2. Mission......................................................................................................... 5
2.3. Goals............................................................................................................. 5
3. Current business model......................................................................................... 5
4. Business performance........................................................................................... 6
5. Current international operations and experience...................................................7
III. COUNTRY ANALYSIS.........................................................................................7
1. Country evaluation................................................................................................ 7
1.1. Political......................................................................................................... 7
1.2. Economic...................................................................................................... 8
1.3. Social............................................................................................................ 8
1.4. Technological................................................................................................8
1.5. Legal............................................................................................................. 9
1.6. Environmental...............................................................................................9
2. Target industry analysis.......................................................................................10
2.1. Industry Overview...................................................................................... 10
2.1.1. Industry Size and Location.................................................................10
2.1.2. Production.......................................................................................... 11
2.1.3. Consumption...................................................................................... 11
2.2. Customer segmentation and preferences:................................................... 12
2.2.1. Customer segmentation......................................................................12
2.2.2. Preferences......................................................................................... 13
2.3. Competitor analysis and benchmarking......................................................14
2.4. Opportunities and challenges for international expansion..........................14
2.4.1. Opportunities......................................................................................14
2.4.2. Challenges.......................................................................................... 15
IV. INTEGRATED INTERNATIONAL BUSINESS PLAN...................................15
1. SWOT Analysis...................................................................................................15
1.1. Strengths..................................................................................................... 15
1.2. Weaknesses................................................................................................. 16
1.3. Opportunities.............................................................................................. 17
1.4. Threats........................................................................................................ 17
2. Entry Mode Selection..........................................................................................18

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 3. Integrated international business plan................................................................. 20
3.1. Selection of the suitable international business strategy............................ 20
3.2. Implementation plan................................................................................... 21
3.2.1. Timeline............................................................................................. 21
3.2.2. Performance measurement................................................................. 31
V. CONCLUSION....................................................................................................... 32
VI. REFERENCES..................................................................................................... 33

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I. INTRODUCTION

The global dairy market has witnessed significant growth and transformation
over the past decade, driven by rising health consciousness and increasing demand for
nutritious food products. Within this context, TH True Milk, a prominent Vietnamese
dairy company, has established itself as a leading brand known for its high-quality,
organic dairy products. To sustain its growth trajectory and leverage new market
opportunities, TH True Milk is poised to expand its operations into Indonesia, one of
Southeast Asia's largest and fastest-growing economies.

The report presents a comprehensive Integrated International Business Plan for

TH True Milk's strategic expansion into the Indonesian market. The plan encompasses
a detailed company analysis, an extensive country analysis, and a cohesive business
strategy tailored to the unique dynamics of the Indonesian dairy sector.

The company analysis section provides an in-depth look at TH True Milk's

history of foundation and development as well as the international operation and
experience of the company. This analysis underscores the company's characteristics
and identifies potential areas for improvement as it prepares to enter a new
international market.

Following the company analysis, the country analysis section examines

Indonesia's economic landscape, regulatory environment, consumer behavior, and
market potential for dairy products. This analysis highlights the opportunities and
challenges associated with entering the Indonesian market, offering a nuanced
understanding of the local business environment.

Finally, the integrated international business plan outlines a strategic roadmap

for TH True Milk's market entry and growth in Indonesia. By synthesizing insights
from both the company and country analyses, the plan aims to ensure a successful and
sustainable expansion for TH True Milk in Indonesia.

II. COMPANY ANALYSIS

1. History of formation and development

TH True Milk was founded in 2009 and is part of the TH group. TH True Milk
has grown from a company managed by the TH Group to one of Vietnam's leading
fresh milk producers. Over the years, the company has consistently invested and
developed, constructing a modern farm and factory system that employs cutting-edge
technology. The development process not only assists TH True Milk in meeting the
market's increasing demands, but it also creates the optimal conditions for the
country's significant competitive advantage. In Vietnam, TH True Milk has 30%
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market share in the fresh milk segment through retail channels and is ranked second
among the top ten reputable food companies in 2020.

2. Vision, mission and goals

2.1. Vision

TH Group aspires to be Vietnam's leading processor in the clean food industry

with natural ingredients. With serious and long-term investment, as well as the world's
most advanced science, the company is determined to become a world-class food
brand that every consumer loves and the nation is proud of.

2.2. Mission

With a strong connection to nature, TH Group strives to nourish the

Vietnamese body and soul by providing natural food products that are clean, safe,
fresh, delicious, and nutritious.

2.3. Goals

During many years of formation and development, TH True Milk has always
aimed at sustainable goals and contributed to the community, such as leading the
Vietnamese market in clean food, building a recognized food brand known not only
domestically but around the world, always pioneering in research and development
activities for Vietnamese milk quality, modern production technology and long-term
investment in infrastructure and technology.

3. Current business model

One of the most common types of organizational structures used by TH True

Milk is the functional structure, which divides an organization into departments based
on common work responsibilities. The functional organizational structure enables the
TH True Milk staff to specialize and is easily adaptable as the business grows.

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 Figure 1. Business Model of TH True Milk

4. Business performance

Along with clean fresh milk, TH Group has developed and expanded many
product lines, including processed foods, nutritional formulas, healthy drinks, and
herbal products. The total number of products under the TH brand now exceeds 170.

TH was also the first brand in the fast-moving consumer goods (FMCG)
category to open a sales channel on Tiktok Shop and begin livestream sales in 2022.
The past period saw the launch and continued success of TH true mart's online store
on Vietnam's largest e-commerce platforms. Major social networking platforms
recognize TH Group as an excellent company with the best digital performance from
2022 to 2023.

With a sharp business policy and the optimization of all resources, by the end
of 2024, TH Group will continue to achieve double-digit growth - many times higher
than the general growth rate of the industry in urban areas.

TH's healthy beverage products, which are researched and produced to the
highest standards, have also grown significantly in comparison to the industry as a
whole. Typically, the fruit milk drink industry (brand TH true JUICE MILK) increased
by 62%, while the yogurt industry increased by 10.3% (more than doubling the overall
industry forecast increase).

By the end of 2024, TH True Milk's e-commerce revenue will have increased
by 45% over 2023, with the company ranking first in milk and dairy product revenue
on TikTok Shop and third in revenue across all mega sale campaigns on Shopee.

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 5. Current international operations and experience

With outstanding thinking and the application of high-tech agriculture in the

field of fresh milk production and processing, dairy products branded TH True Milk in
the dairy market have quickly become the priority choice of domestic and
international consumption since the first products were launched. Up to now, TH
Group has the right to be proud that TH True Milk fresh milk products account for
45% of the fresh milk market share in Vietnam with about 160 products, having
expanded the market to China, other ASEAN countries, and the Russian Federation.

In October 2019, TH was the first Vietnamese enterprise to be granted an

official export code for fresh milk into the Chinese market.

In February 2022, with the signing of a Memorandum of Understanding with

HAO Mart - Singapore's leading retail supermarket system, TH Group continues to
expand the market for dairy and clean food products in Asia.

After more than 2 years of working with testing and distribution partners, in
mid-July 2023, TH's set of fresh milk products, fruit milk and drinks, and herbal tea
bags, etc., were successfully exported to Japan. The first order has been distributed to
nearly 100 supermarkets and stores across the land of cherry blossoms.

III. COUNTRY ANALYSIS

1. Country evaluation

1.1. Political

Indonesia is a republic with a presidential and constitutional system. The

president is both the head of state and the head of government, as well as the
commander-in-chief of the Indonesian National Armed Forces. Presidential terms last
for 5 years. Several major political parties play significant roles in Indonesian politics,
including the Indonesian Democratic Party of Struggle, the Great Indonesia
Movement Party, the Democratic Party, and the Prosperous Justice Party.

For a long time, Indonesia faced political instability. However, by 2021, the
country had actively dismantled and weakened many terrorist groups linked to the
self-proclaimed Islamic State (IS) and Al Qaeda. In recent years, Indonesia has
achieved security and political stability and has become a peaceful Islamic model. The
country maintains an independent foreign policy, avoiding alliances while proactively
balancing relations with major powers, which affirms its important regional and global
position. This stable political situation has helped Indonesia attract significant
investment and progress toward a democracy that supports economic development.

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 1.2. Economic

Indonesia, Southeast Asia's largest economy and a diverse archipelago nation

with over 300 ethnic groups, has experienced impressive economic growth since
recovering from the Asian financial crisis in the late 1990s. Indonesia is currently the
world's fourth most populous country and the tenth-largest economy in terms of
purchasing power parity (World Bank, 2023).

According to the latest announcement of the Indonesian statistics agency, in the

first quarter of 2024, Indonesia's GDP recorded a growth rate of 5.11% over the same
period, exceeding expectations and being the highest growth rate over the same
period. Indonesia's economy is defined by its abundant natural resources. This country
is a leading producer of nickel, palm oil, copper, coal, tin, and bauxite. In recent years,
the government has restricted exports of several key commodities to encourage
investment in locally based processing facilities and thus move up the value chain.
Besides mining, agriculture is a key part of Indonesia's economy, making up about
12% of GDP in 2022 and employing a large portion of the workforce. Indonesia's
industrial sector is expanding, with significant activities in textiles, chemicals, and
commodity processing. While the services sector is important to Indonesia's economy,
it contributes a smaller share of GDP compared to developed countries, highlighting
Indonesia's status as an emerging economy.

1.3. Social

Indonesia has a population of over 281 million, making up 3.51% of the global
population (Worldmeter, 2023). It is the world's largest Muslim-majority country, with
about 10% of its population being Christians. The Indonesian constitution guarantees
religious freedom, and the country is very ethnically diverse. Life expectancy is 68
years for men and 72 years for women (BBC, 2023). The literacy rate is around 95%.
The government invests heavily in education and healthcare. The middle class is
growing quickly, leading to changes in consumer behavior. There is increasing
demand for Western food and technology products, ready meals, frozen and processed
food, healthy food, and fashion. Nevertheless, Indonesia faces significant social
challenges such as human rights violations, corruption, nepotism, high smoking rates,
malnutrition, and poverty. To advance to the next stage of development, the country
must effectively address these issues.

1.4. Technological

Indonesia is one of the world's fastest-growing digital markets, with over 212
million internet users (Vneconomy, 2023). It also ranks second in Southeast Asia in
terms of startup ecosystem. Digitalization and increased use of online services have
helped the Indonesian economy weather the financial storm caused by the global

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pandemic and geopolitical instability. In addition, the Indonesian government is
promoting the "Making Indonesia 4.0" program, which aims to apply advanced
technologies like robotics, artificial intelligence, and the Internet of Things (IoT) to
manufacturing sectors. The program also aims to create a skilled workforce to help
industries transition to the digital age. According to Tech Collective, Indonesia's
technology sector has the potential to grow significantly, not only through government
initiatives and support but also through innovative startups disrupting traditional
industries through the use of technology. Gojek, a ride-hailing and delivery service in
Indonesia, is transforming the way Indonesians move and access daily services such
as food delivery, groceries, and beauty services. Other prominent commerce platforms
including Traveloka, Bukalapak, and Ruangguru have fueled economic growth and
improved the lives of millions of Indonesians. As a result, Indonesia is a country that
attracts a lot of investment capital and invests in and applies technology to production
and infrastructure. This helps TH True Milk receive advanced science and technology
from this country for application in milk production.

1.5. Legal

Indonesia has gone through profound social, political, and economic changes
over the last decade. The country has progressed from an authoritarian regime to one
of Asia's most vibrant and decentralized democracies. This transformation is
particularly notable given Indonesia's high vulnerability to natural disasters,
geographical fragmentation, and large ethnically diverse population. However, legal
issues, both criminal and civil, are the most contentious in Indonesia's debate over
how the law should be applied (Butt, 2016). The three elements of Indonesian law
include: Religious Law (customary law), Law built on the Dutch law system (Civil
Law), and modern Indonesian Law. Because of the complex legal system, private or
business enterprises in this country must deeply understand all three sets of laws
mentioned above and absolutely do not sell restricted products, especially those that
have been prescribed in Islamic law.

1.6. Environmental

Indonesia is located on the margins of the Pacific, Eurasian, and Australian

plates, making it volcanic and earthquake-prone. Indonesia is rich in mineral
resources. It is not only the world's fourth-largest coal producer but also the largest
thermal coal exporter. This country has vast tropical rainforests, coral reefs, and other
unique ecosystems that provide critical habitat for countless plant and animal species
while also supporting a variety of critical economic activities such as fishing and
tourism. However, this country also suffers from many consequences of natural
disasters and environmental pollution. Typically, floods in Jakarta in 2020 forced over
34,000 people to evacuate their homes. According to Sarman Simanjorang, Chairman

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of the Indonesian Businessmen Association, the estimated economic loss is
approximately 1,000 billion Rupiah (equivalent to 70.05 million USD) as a result of
stores and businesses closing, temporarily suspending operations, and disrupting the
supply chain (The Jakarta Post, 2021).

2. Target industry analysis

2.1. Industry Overview

According to research by Roland Berger, the dairy market in Indonesia displays

a positive outlook over the next few years and shows the most promising and
aggressive growth trajectories in the region, due to the demographic expansion,
increased affluence, and the influence of modern consumerism in ASEAN countries.

Figure 2. Daily market expected growth, ASEAN countries (Euromonitor)

2.1.1. Industry Size and Location

Based on a report by USDA, the current populations of dairy cows in Indonesia

are more than 32,000 heads. According to Statista, 99 percent of all dairy cows in
Indonesia are located on the island of Java in the three provinces of East Java (78,7
percent), Central Java (20 percent), and West Java (1,2 percent). Therefore,
Indonesia’s fresh milk production is mostly concentrated on the island of Java.

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Figure 3. Number of dairy cows in Indonesia, by province and gender (Statista)

2.1.2. Production

According to the Indonesian Dairy Cooperatives Association (GKSI, Gabungan

Koperasi Susu Indonesia), the Foot and Mouth Disease (FMD) outbreak in mid-April
2022 decreased annual domestic milk production by 35 to 60 percent, causing the
death of 11,581 dairy cows. After the FMD, many cows failed to produce milk and
had to be slaughtered. As a result, the average daily yields of dairy cows reduced to
9-10 liters.

The Secretary of the Directorate General of Livestock and Animal Health at the
Ministry of Agriculture (Kementan), Makmun, stated that since 2017, the Indonesian
milk demand has increased by an average of 6 percent annually; however, its
production only increases by 1 percent each year. This shows that the demand and
production are always unbalanced, so Indonesia has to import milk every year.

One of the solutions to meet the rising demand for dairy products is increasing
the population of dairy cows, both through imports and artificial insemination. The
Jakarta Post revealed that Indonesia would need to import an additional 2.5 million
dairy cows to meet the demand for regular milk consumption and the Free Milk
Drinking program proposed by the Prabowo-Gibran team.

2.1.3. Consumption

Currently, Indonesia’s milk consumption market is seeing a rebound after the

FMD in 2022. According to the latest report by Ken Research, the Indonesian dairy

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industry is expected to experience robust growth with a CAGR of 5.4% from 2022 to
2027 and is expected to reach US$12.7 billion by 2027.

There has been a significant increase in demand for dairy products since more
people are moving to urban areas and adopting Western dietary habits. In addition,
there has been a rising health awareness among Indonesian consumers, creating an
increasing demand for functional dairy products like probiotic yogurts and fortified
milk. Moreover, Indonesia's growing middle class and rising disposable incomes have
led inhabitants to an increased tendency to spend on value-added dairy products.

2.2. Customer segmentation and preferences:

2.2.1. Customer segmentation

To better understand and cater to market needs, Indonesian consumers of dairy

products are classified by demographic, psychographic characteristics, and behavioral
factors.

a. Demographic Segmentation

- Age and Family Structure: Younger families with children tend to purchase
more milk and yogurt products. Parents seek nutritional benefits for their
children, which drives the demand for fortified milk and dairy snacks.

- Income Levels: Higher-income consumers are more likely to purchase

premium and organic dairy products, while middle to lower-income groups opt
for affordable, standard options. Premium segments include imported cheeses
and organic milk, which are gaining popularity in urban areas​.

- Geographical Location: Urban consumers in cities like Jakarta and Surabaya

show a higher propensity to buy a wider variety of dairy products, including
lactose-free and organic options. Rural consumers primarily purchase basic
dairy products like fresh milk.

b. Psychographic Segmentation

- Health Consciousness: There's a growing segment of health-conscious

consumers who prefer low-fat, lactose-free, and organic dairy products. This
trend is driven by increasing awareness of health and wellness.

- Lifestyle and Convenience: Busy urban lifestyles have increased the demand
for convenient dairy products such as ready-to-drink milk and single-serve
yogurts. Convenience stores and online shopping are significant distribution
channels for these products.

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 c. Behavioral Segmentation

- Consumption Patterns: Regular vs. occasional consumers. Regular consumers

often include households with children and individuals focused on fitness and
health. Occasional consumers might purchase dairy products as part of special
diets or specific health regimes.

- Brand Loyalty: Brand-conscious consumers tend to stick to well-known brands

like Nestlé and Danone, and local giants like PT Ultrajaya. Brand loyalty is
particularly strong for products perceived as high-quality or offering unique
health benefits​.

d. Market Trends

- E-Commerce Growth: The rise of e-commerce has significantly influenced

purchasing behaviors, especially for urban consumers who value the
convenience of home delivery. E-commerce platforms are becoming crucial in
the distribution of dairy products.

- Health and Wellness Trends: The increasing preference for health-oriented

dairy products, such as those with added probiotics, vitamins, and minerals,
reflects a broader trend towards healthier eating habits​.

2.2.2. Preferences

The Indonesian dairy market is not just growing but is also evolving by 4 major
factors of preferences from customers, including:

- Health Takes Center Stage: Consumers are increasingly prioritizing their

well-being, driving demand for fortified milk, yogurt with live cultures, and
even dairy alternatives catering to specific dietary needs.

- Expanding Wallets: Rising disposable income allows consumers to explore

diverse dairy options, indulge in premium choices, and embrace new flavor
trends.

- Urbanization Cravings: Busy lifestyles in urban areas crave convenient and

readily available dairy products, fueling the rise of single-serve options,
ready-to-drink milk, and innovative snacking solutions.

- Lactose Intolerance Not a Barrier: Growing awareness of lactose intolerance

and veganism is leading to a surge in plant-based and lactose-free options,
widening the consumer base.

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 Demand for ‘sustainable’ products will grow as environmentally-conscious
consumers drive the demand for eco-friendly packaging and sourcing in dairy
products. Dairy manufacturers will respond with initiatives like using recycled
materials or supporting sustainable farming practices. With higher disposable incomes
in Indonesia, demand for these products which will be sold at a premium will
eventually grow as well, especially in the major urban cities like Jakarta, Medan, and
Surabaya.

2.3. Competitor analysis and benchmarking

Domestic demand for fresh milk and its by-products (such as butter, cheese,
and cream) has not always been fully met in Indonesia by local companies. As a
result, numerous international players such as Nestle and Royal Friesland entered the
market. Increased awareness of quality products and flavor variants, higher personal
disposable incomes, and adoption of a healthy lifestyle have forced manufacturers and
retailers to intensify their efforts to improve accessibility towards natural, organic,
friendly dairy-based products in the future, thus, believing it to be more nutritious and
lower levels of fat.

2.4. Opportunities and challenges for international expansion

2.4.1. Opportunities

Being currently the fourth most populous country in the world and an
upper-middle-income country, Indonesia is a potential market with huge consumption.
The young population structure at the age of under 27 in Indonesia accounts for about
54% of the total population, known as the "golden" age with the highest consumption
needs of dairy products in the country.

Moreover, international business expansion into Indonesia will be at ease

thanks to Government Support. The Investment Coordinating Board of the Republic
of Indonesia (BKPM), which is the Indonesian government agency established to
assist foreign companies in investing in Indonesia, offers a one-stop shop and online
service to assist foreign investors, with targets for approval times. For major
investment projects, BKPM offers a fast-track service to help foreign investors get the
approvals they need to set up operations in Indonesia.

On the production side, the majority of Indonesia’s dairy farms are small with
merely two or three cows per farm, causing low productivity and profitability. This
will create ample opportunities for international businesses to offer expertise and
technology, invest in infrastructure, or set up joint ventures with local farmers.

14
 Furthermore, Indonesia is a member of ASEAN, so when Vietnam or other
ASEAN country members export to this market, they will enjoy export advantages
from the ASEAN Trade in Goods Agreement (ATIGA) with 0% tax.

2.4.2. Challenges

Challenges for expanding business into the Indonesian dairy industry include
the country’s tropical temperature, which tends to result in less milk produced by dairy
cows compared to dairy cows living in subtropical climates. Hygiene is also an issue
because the majority of dairy farms in Indonesia are traditional facilities with
equipment deficiencies.

Regarding the Indonesian dairy market, although being considered a potential

market with a high growth rate, the dairy industry in Indonesia is suffering from great
fragmentation when 77% of the industry's market share is concentrated in 4 giants
Nestlé, Frisian Flag Indonesia, Ultrajaya Milk Industry and Indolakto PT. Among
them, two multinational enterprises Nestlé and Frisian Flag Indonesia are dominating
the market with market shares of 26% and 21% respectively. Moreover, Indonesia has
been importing milk for many years and major milk exporting powers in the world
such as New Zealand, Australia, the United States, etc. have penetrated this market,
creating a big challenge for small and medium-sized dairy enterprises to penetrate and
expand their business in Indonesia.

IV. INTEGRATED INTERNATIONAL BUSINESS PLAN

1. SWOT Analysis

Choosing the right entry mode for international expansion is crucial for TH
True Milk's success in Indonesia. A SWOT analysis provides a valuable framework
for this decision by systematically evaluating their internal strengths and weaknesses
alongside the external opportunities and threats presented by the Indonesian market.
This comprehensive approach offered by a SWOT analysis allows the research team
to suggest an entry mode that best leverages TH True Milk’s strengths, addresses its
limitations, and capitalizes on the Indonesian market's potential.

1.1. Strengths

Strong financial backing

The company benefits from a stable financial background with support from
the Northern Asia Commercial Joint Stock Bank (Bac A Bank). One notable
investment project is the construction of a concentrated dairy cattle farming complex
in Cao Bang with a scale of 10,000 cows, along with a milk processing plant with a

15
capacity of 49,000 tons per year (Nhan Dan News, 2020). The total investment capital
for the project is approximately 2.5 billion VND.

Large-scale and advanced factories and farms

TH Group prioritizes quality throughout its dairy production process.

Electronic leg tags monitor cow health, automate milking system control, and ensure
milk quality. Cows receive clean, pure water thanks to Amiad filtration technology.
Freshly milked milk travels through chilled pipes to on-farm tanks before refrigerated
transport to the processing plant, maintaining a cool temperature between 2-4°C. The
entire system utilizes state-of-the-art equipment imported from leading countries and
adheres to strict ISO quality standards (ISO 9001 for operations and ISO 22000 for
food safety).

Strong brand reputation

TH True Milk is known for its commitment to "clean milk", with a focus on
fresh, high-quality products. The company also fosters a strong brand image through
its dedication to social responsibility in Vietnam. TH True Milk's social initiatives
include establishing farms and processing plants, which create jobs and boost local
agriculture, donating milk to underprivileged children, and undertaking infrastructure
projects. This commitment strengthens consumer trust and reinforces TH True Milk's
positive image.

1.2. Weaknesses

Relatively high price

TH True Milk's fresh milk products are priced higher than many other dairy
brands on the market, such as Vinamilk and Dutch Lady. For example, one standard
batch of 4 cartons of 180ml TH True Milk’s sterilized fresh milk costs approximately
39,000 VND, compared to 32,500 VND for Vinamilk and 33,000 VND for Dutch
Lady, according to Bach Hoa Xanh’s website. This pricing strategy has, to some
extent, reduced the brand's competitive advantage because consumers in the middle
and lower-income segments tend to be more cautious when making purchasing
decisions. As a result, the brand's choice of market segment and target customer base
has also narrowed.

High operational costs

TH True Milk invests heavily (billions of VND annually) in advanced

machinery, equipment, and high-quality imported cattle. The high costs of maintaining
international standards pose challenges to TH True Milk's profit margins and require
the company to carefully balance quality standards with financial sustainability.

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 1.3. Opportunities

Halal certification

The halal food sector is booming, particularly in Southeast Asia, North Asia,
and the South Pacific, which boast a massive Muslim population (860 million, or 66%
globally) according to a 2021 report by VIR. In Indonesia, a key market, a staggering
87% of the population identifies as Muslim (Duis, 2024). TH Group is well-positioned
to capitalize on this trend. Since 2014, it has held a halal certification, and its strict
quality standards align perfectly with those required for halal products. This foresight
proved valuable in 2021. While the world grappled with the pandemic, TH Group was
actively building relationships with halal market partners and participating in relevant
events (VIR, 2021). In fact, it was among the Vietnamese businesses selected for the
"Vietnam National Brands Week 2021" in Singapore, a prestigious halal food expo.

Increasing demand for dairy products in Indonesia

Boasting Southeast Asia's largest economy (over $1 trillion GDP) and a rapidly
growing population exceeding 278 million in 2023 with rising incomes (Business
Indonesia, 2023), Indonesia presents a golden opportunity for TH True Milk. This
potential is further solidified by the dairy market projected to reach $14.4 billion by
2025, with a remarkable 5.4% annual growth rate (Ken Research, 2024). This
significant upward trend is driven by rising disposable income, particularly among
Indonesia’s growing middle class. In addition, a growing health-conscious population
in Indonesia may be receptive to TH True Milk's "clean milk" concept and its fortified
dairy products. Urbanization in Indonesia also presents a great opportunity for TH
True Milk's pre-packaged dairy products as the fast-paced lifestyle of modern
Indonesians has fueled a demand for convenient and portable dairy options.

1.4. Threats

Established local dairy companies

Indonesia has well-established domestic dairy companies with strong brand

recognition and distribution networks such as Nestle, Royal FrieslandCampina, PT
Indofood CBP, Greenfields, etc. These local players have been operating in Indonesia
for many years, building strong brand recognition and customer loyalty. Consumers
might be hesitant to switch from familiar brands they trust. In addition, established
domestic companies have well-developed distribution networks across Indonesia. This
ensures their products are readily available to consumers, giving TH True Milk a
disadvantage in terms of market access. Another aspect to consider is that domestic
dairy companies likely have a deeper understanding of Indonesian consumer
preferences for dairy products because of firsthand experience gained from direct

17
operation in the Indonesian market and constant exposure to consumer feedback and
market data, thereby tailoring their offerings to suit local tastes better.

Navigating relevant regulations

Importing dairy products into Indonesia necessitates a comprehensive

understanding of import regulations. TH will need to obtain an import permit from the
Ministry of Trade. This process typically involves submitting a multitude of
documents, including product information, invoices, certificates of analysis, and a
letter of guarantee. Even seemingly minor discrepancies can lead to delays or
rejections at customs, causing financial losses and disrupting market entry timelines.
Besides import permits, specific regulations govern product labeling. All imported
dairy products must be labeled in Bahasa Indonesia, the national language. This
includes details like product name and description, net content, ingredients list with
specific percentages, expiration date, and the manufacturer's address. Non-compliance
with labeling regulations can result in product seizure or fines. Additionally, while TH
True Milk already possesses halal certification, ensuring it adheres to Indonesian halal
standards possibly requires additional steps. Indonesian authorities might require
audits by local halal certification bodies like LPPOM (Lembaga Pengkajian Pangan,
Halal) to verify compliance.

2. Entry Mode Selection

Due to the insights gleaned from the SWOT analysis, and considering TH True
Milk's limited experience and distribution network in Indonesia, we decided to
explore an export-first approach followed by a potential joint venture. This initial
phase allows TH True Milk to test the market with their existing products and gauge
consumer response. However, the SWOT analysis also highlighted the limitations of
solely relying on exports, such as import duties and potential logistical challenges for
fresh milk. Therefore, a joint venture with a reputable Indonesian dairy company
emerges as a strategic long-term goal.

Phase 1: Exporting

Exporting allows TH to gain prior exposure to the Indonesian market with a

lower beginning investment compared to setting up a local presence. TH can leverage
its existing production infrastructure in Vietnam and minimize initial spending on
establishing a physical presence in Indonesia. It can gauge consumer response to its
products, identify potential challenges and opportunities, and gather useful market
data before committing to a larger presence. From there, the company is able to devise
suitable marketing campaigns to gradually build awareness of its "clean milk" concept
and high-quality dairy products.

18
 Exporting also helps TH initially avoid the complexities of market access and
distribution through a strategic alliance with an established local distributor.
Partnering with a credible Indonesian importer provides TH with immediate entry to
the Indonesian dairy market and distribution channels. TH can avoid the risks
associated with setting up and managing operations in a new market, such as hiring
local staff and managing logistics within Indonesia.

In addition, the export model offers greater flexibility. TH can start with
smaller quantities, test different product variations, and adjust its export strategy based
on market response. Thanks to that, it can adapt and refine its approach before
conducting a larger-scale market entry.

Phase 2: Joint venture

While exporting offers a low-risk entry point for TH into the Indonesian
market, a well-structured joint venture with a reputable local dairy company presents a
more strategic and sustainable approach for long-term success.

Partnering with a local company grants TH access to established distribution

networks, eliminates the need to build its own infrastructure, and facilitates reaching
diverse consumer segments across the country. The local partner's expertise also aids
in navigating complex regulations, procedures, and Halal certification, ensuring
compliance and avoiding delays.

Beyond access, a joint venture offers deeper market knowledge and consumer
insights. The local partner possesses in-depth understanding of consumer preferences,
purchasing habits, and cultural nuances. This enables TH to tailor products, marketing
strategies, and pricing to resonate better with local consumers. Additionally, the
partner can assist with product adaptations or the development of new variations
specifically for the Indonesian market. Furthermore, the local presence keeps TH
informed about emerging trends, competitor strategies, and new development
opportunities.

Joint ventures also offer shared investment and risk mitigation. The initial
financial burden and operational costs associated with establishing a larger market
presence are reduced through shared investment. In addition, both parties share risks
related to market fluctuations, changing consumer preferences, or economic
challenges, leading to a more stable market position for TH.

Finally, through a joint venture, TH can build a stronger brand presence by

taking advantage of the local partner's existing brand recognition and trust with
consumers. This association accelerates TH's brand-building efforts and establishes it

19
as a credible entity. Collaboration on marketing strategies facilitates a wider audience
reach and a more impactful brand presence.

3. Integrated international business plan

3.1. Selection of the suitable international business strategy

To determine the most suitable international business strategy in Indonesia, TH

True Milk should take a look at the pros and cons of 4 international business
strategies: Global, International, Multidomestic, and Transnational.

The international strategy is about distributing locally sourced products with

minimal adaptation to foreign markets while centralizing production and operations in
the domestic market. This strategy has some advantages when it allows companies to
test products and competitiveness in local markets before large-scale entry with a view
to minimizing investment risks; lowering the costs of investment infrastructure,
workforce, and customer support in different countries; ensuring efficient supply chain
management and production within a single location. Nonetheless, international
business strategies also come with several drawbacks including the financial burden of
shipping products to foreign markets and the high cost of taxes in the long run; the
challenges of maintaining smooth trade operations and compliance with foreign trade
regulations from abroad; exchange rate fluctuations risks which might lead to
instability and increased costs; keeping up to date with changing export rules, product
standards, customs documentation requirements, and more.

The global strategy concentrates decision-making power and operational

control entirely at the corporate headquarters Local subsidiaries are in this case totally
dependent on the headquarters acting as pipelines of products and strategies. Global
companies focus on consistency, efficiency, and scale through uniformity rather than
localization to be able to build a solid brand identity that is easily recognizable with
fewer operational hassles; leverage economies of scale by having one standard
product line which contributes to lower costs per unit. Despite the advantage of
unifying operations and branding, some risks still exist if the company is completely
detached from local expectations and becomes culturally irrelevant.

The multidomestic approach prioritizes local responsiveness over global

upscaled production. This means companies tailor everything, from products,
marketing, and the customer experience to the unique preferences of each locale. And
to be fully adaptive and responsive to every target market, multidomestic companies
have local subsidiaries operating independently from the established headquarters to
better serve each market independently. Following a multidomestic strategy allows
firms to gain a great competitive advantage by capitalizing on local trends and market
gaps to differentiate their brand and outperform local competitors; providing local

20
consumers with a highly personalized experience to drive higher satisfaction and
loyalty rates. However, some of the challenges that come with implementing a
multidomestic business strategy include extensive time and on-ground resources
necessary to research target markets and a distinct strategy that aligns with each
country; producing locale-specific products and marketing materials can lead to higher
operational and production costs.

The transnational strategy combines elements of global and multidomestic

strategies by prioritizing both local responsiveness and global integration by striking
the right balance between them. They standardize backend manufacturing and
distribution across countries to achieve economies of scale. However, when
interacting with local markets, they allow for flexibility and localization in
promotional messaging and sales channels. As they do so, countries that implement a
transnational strategy expand their operations at a full scale in various markets while
operating primarily from the headquarters in the home country. By doing so, these
companies can enjoy the benefits of a unified brand such as the ability to compete
with both global and local companies; the advantage of optimizing production for
maximum efficiency leads to lower average costs per unit and greater economies of
scale; access to worldwide resources, infrastructure, and local capabilities drives
innovation, boosts efficiency, and reduces costs. However, similar to all international
business strategies, the transnational approach also presents some challenges
especially in coordinating between subsidiaries and determining the degree of local
responsiveness needed.

With the current business model and features of the Indonesian market, a
transnational strategy appears most suitable for TH True Milk, balancing the need for
global efficiency with local responsiveness. This strategy allows the company to
leverage its global brand strength and operational efficiencies while adapting products
and marketing strategies to meet the specific preferences and regulatory requirements
of the Indonesian market.

3.2. Implementation plan

3.2.1. Timeline

a. Exporting (Estimated duration: 12-18 months)

Business Goals

The goals during this period are to establish a foothold in the Indonesian market, test
product reception, gather market data, and build brand awareness before transitioning
to a future joint venture or more substantial market presence.

Business Activities
21
 ● Months 1-3:

Market research and importing partner selection (3 months):

- Conduct comprehensive market research using a combination of primary and

secondary data sources.

+ Primary research: Conduct online surveys or focus groups with

Indonesian consumers to understand preferences for imported dairy
products, brand awareness of competitors, and purchase motivations. (1
month)

+ Secondary research: Analyze reports and data from industry

publications, government agencies, and market research firms
specializing in Indonesia's dairy market. (2 months)

- Develop a detailed competitor analysis, identifying major players, their product

offerings, pricing strategies, and marketing approaches. (1 month)

- Partner with a credible market research agency in Indonesia for more in-depth
consumer insights and local market expertise. (Optional, 1 month)

- Identify and evaluate potential Indonesian importers with experience in

importing and distributing dairy products (2 months). Focus on companies
with:

+ Established distribution networks across various regions of Indonesia.

+ Strong relationships with major retailers and supermarkets.

+ A proven track record of successfully launching and marketing imported

food products.

+ Experience navigating Indonesian import regulations and halal

certification processes.

Product selection and adaptation (2 months):

- Analyze market research findings and finalize the selection of TH True Milk
products for initial export to Indonesia, prioritizing products that:

+ Align with Indonesian consumer preferences for taste, functionality

(e.g., lactose-free options), and packaging formats (e.g., single-serve
options).

22
 + Have a strong value proposition that differentiates them from
competitors (e.g., "clean milk" concept, innovative packaging,
high-quality ingredients).

- Explore potential adaptations to product formulations, packaging designs, and

labeling to comply with Indonesian regulations and resonate better with local
consumers. Considerations for adaptations:

+ Formulations: Explore adjusting sugar content, fat content, or

introducing new flavors based on market research.

+ Packaging design: Maintain core brand identity while incorporating

elements that appeal to Indonesian consumers, such as using Bahasa
Indonesia prominently, utilizing familiar colors or visuals, and
considering smaller serving sizes if appropriate.

+ Labeling: Ensure compliance with Indonesian labeling regulations,

including mandatory information in Bahasa Indonesia, nutritional
information, and potential halal certification logos.

● Months 4-6:

Regulatory compliance (4 months):

- Partner with a trade consultant or legal advisor specializing in Indonesian food

import regulations. (1 month)

- Research and understand all necessary import permits, labeling requirements,

and halal certification processes for dairy products in Indonesia. Compile a
comprehensive list with timelines for each step. (1 month)

- Partner with a reputable Indonesian company specializing in halal certification

to initiate the halal certification process for selected TH True Milk products. (2
months)

- Initiate the process of obtaining the required import permits (including

quarantine inspections) from the Indonesian Ministry of Trade (MoT) and other
relevant government agencies. This process can be time-consuming, so allow
sufficient buffer time for possible delays. (2 months)

Contract negotiation and finalization (2 months):

Finalize agreements with the selected Indonesian importer, outlining terms including:

+ Responsibilities for import, distribution, marketing, and customer service.

23
 + Pricing structure, profit sharing, and payment terms.

+ Minimum order quantities and delivery schedules.

+ Marketing and promotional activities to be undertaken by both parties.

+ Dispute resolution mechanisms.

Product adaptation and packaging design (2 months):

- Finalize any necessary product adaptations based on market research and

regulatory requirements.

- Partner with a local Indonesian design agency to develop culturally sensitive

and visually appealing packaging that complies with labeling regulations.

Marketing strategy development (2 months):

- Develop a targeted marketing strategy for Indonesia, focusing on digital

platforms and social media engagement that resonate with Indonesian
consumers. Platforms to consider: Popular social media platforms in Indonesia
(e.g., Instagram, Facebook, Shopee), influencer marketing partnerships, and
potentially collaborating with relevant food and beverage bloggers or social
media personalities.

- Content strategy: Develop engaging content that highlights the unique selling
points (USPs) of TH True Milk products (e.g., "clean milk" concept,
high-quality ingredients, innovative packaging), leverage emotional
connections with family and health, and is culturally sensitive.

- Consider partnering with a local Indonesian marketing agency to ensure

culturally sensitive messaging and effective execution of the marketing.

● Months 7-12:

Production and logistics:

- Coordinate production of TH True Milk products for export to Indonesia,

ensuring sufficient stock to meet initial demand. (1 month)
- Finalize logistics arrangements for shipment to Indonesia, including customs
clearance procedures. (1 month)

Marketing launch and brand building:

- Launch the marketing campaign in Indonesia, utilizing online platforms and

social media to build brand awareness and generate excitement.

24
Monitoring and performance evaluation:

- Continuously monitor marketing campaign performance, sales data, and

consumer feedback through the Indonesian importer.
- Analyze market data and consumer feedback to understand market response
and identify areas for improvement.
b. Joint Venture

Step 1: Market Research & Partner Identification (3-6 months)

The first action TH True Milk should take is to conduct in-depth market
research to analyze consumer behavior, the competitive landscape, and the regulatory
environment in Indonesia, utilizing the historical data it obtained during the time of
pure exports to Indonesia. Then, TH states the intended objectives and the purpose of
the joint venture clearly. The demand for the collaboration must be compelling and
apparent to entice other businesses to engage. The step of choosing the right partner(s)
is fundamental. The suitable partner should bring complementary skills, resources,
and markets. It’s important to conduct due diligence on potential partners to
understand their financial standing, reputation, and how they conduct business. The
business community is a great place to network and locate possible business partners.
After that is the stage of determining the type of joint venture. There are two common
types of partnership structure in a Joint Venture: Joint Ventures can be
incorporated—a company or a limited liability partnership (LLP) unincorporated— a
partnership, a cooperation agreement, or a strategic alliance.

Regarding potential companies in Indonesia to be in partnership with, it is

recommended that TH True Milk collaborate with Greenfields - a dairy company for
distribution network and source of ingredients.

Step 2: Joint Venture Agreement & Planning (3-6 months)

Joint ventures can be structured in several ways, such as a new business entity
(such as a corporation or partnership), a contractual agreement, or through a joint
venture agreement in which each party’s responsibilities and shares are explicitly
stated. The structure will largely depend on the legal and tax considerations of the
parties involved, as well as the nature of the joint venture itself. The most frequent
action that the two parties can take when creating a joint venture is to establish a new
entity. The joint venture itself is not recognized by the Internal Revenue Service
(IRS), therefore how taxes are paid depends on the business structure between the two
parties. The joint venture will pay taxes like any other company or firm because it is a
separate entity. However, if it decides to function as an LLC, its revenues and losses
would pass through to the owners’ personal tax returns, as with any other LLC. A

25
joint venture agreement outlines the rights and responsibilities of each party. This
includes capital contributions, division of profits and losses, governance structure,
operational roles and responsibilities, exit strategies, dispute resolution mechanisms,
and more. It’s essential to seek legal counsel when drafting this agreement to ensure
all parties’ interests are protected.

For TH True Milk and Greenfields, a joint venture with a new incorporated
entity presents the most suitable option. Both TH True Milk and Greenfields will
benefit from limited liability protection, shielding their personal assets from liabilities
incurred by the joint venture. Besides, an incorporated entity allows for greater
flexibility and control compared to an unincorporated structure. TH True Milk and
Greenfields can establish a clear ownership structure, governance framework, and
decision-making procedures. Moreover, depending on the chosen legal structure and
Indonesian tax regulations, there might be potential tax benefits for both partners
compared to an unincorporated joint venture.

Structure of organization

When TH True Milk chooses a joint venture as its entry mode into the
Indonesian market, the structure of the organization needs to be designed to facilitate
collaboration between TH True Milk and its local partner Greenfields. This structure
should ensure efficient decision-making, clear communication, and effective
management of both global and local operations.

26
Figure 4. TH True Milk’s structure of organization

- Board of Directors: There is an equal representation from TH True Milk

and the local partner. The board provides strategic direction, oversight, and
governance for the joint venture. It makes high-level decisions regarding the joint
venture's objectives, policies, and long-term strategies. They are responsible for
approving major investments and budgets; monitoring the performance of the joint
venture; ensuring compliance with legal and regulatory requirements; and resolving
conflicts between partners.

- Executive Management Team: This team consists of senior executives

taking key positions like CEO, COO, CFO, CMO, CTO from both TH True Milk and
the local partner. They are in charge of the day-to-day management of the joint
venture and execution of the strategic plans set by the board.

- Functional Departments include operations, marketing and sales, finance

and accounting, and R&D departments.

- Regional and Local Offices: The regional office oversees operations in

Indonesia, ensuring alignment with the overall joint venture strategy and facilitating
communication between the local office and TH True Milk’s headquarters. Local
offices are established to manage local sales, distribution, and customer service. These
offices ensure the joint venture’s presence in various markets across the country.

- Advisory Committees consist of Technical Advisory Committee to

provide guidance on production, quality standards, and technological advancements;
Market Advisory Committee to offer insights into consumer trends, competitive
analysis, and marketing strategies specific to Indonesia.

- Integration and Coordination Mechanisms includes joint Working

Groups for specific projects or initiatives, comprising members from both partners to
ensure collaborative efforts; regular meetings to review progress, resolve issues, and
ensure continuous alignment; reporting systems to provide transparency and real-time
information sharing between TH True Milk and the local partner.

Corporate culture and training programs

Cultural Integration Programs is designed to blend the corporate cultures of TH

True Milk and the local partner, fostering a collaborative and cohesive work
environment. Training and Development will be in charge of joint training programs
to enhance skills and knowledge sharing between employees of both partners.

Value chain analysis

27
 The joint venture between TH True Milk and Greenfields in Indonesia can
create a robust value chain by combining their strengths. TH True Milk’s expertise in
dairy processing and global brand management, coupled with Greenfields’ local
market knowledge and distribution network, ensures a competitive advantage. By
focusing on both primary and support activities, the joint venture can deliver
high-quality dairy products to Indonesian consumers efficiently and effectively.

● Inbound Logistics

Greenfields - the largest dairy company in Indonesia produces fresh milk only
from its own integrated farm and processing facility. TH True Milk can leverage this
local supply to ensure the freshness and quality of raw materials. Efficient storage
facilities at Greenfields ensure the proper handling of milk to maintain quality. Joint
investments in advanced storage technologies can further enhance efficiency.

● Operations

Utilizing Greenfields’ existing processing plants, which are already equipped to

handle large-scale dairy production, ensures cost-effective operations. TH True Milk
can contribute its expertise in advanced dairy processing techniques. Implementing
stringent quality control measures from TH True Milk ensures that the products meet
both local and international standards. Continuous monitoring and improvement
protocols can be established to maintain high-quality production.

● Outbound Logistics

Greenfields’ established distribution channels in Indonesia provide an effective

route to market. This includes both modern trade (supermarkets, hypermarkets) and
traditional trade (local markets). TH Company can develop TH true marts chain of
stores with the purpose of bringing to customers the best service. All of the marts will
be built in big cities and on main streets which are convenient for customers.
Collaborative efforts in optimizing the supply chain can reduce lead times and ensure
the timely delivery of products. Implementing advanced logistics technologies can
further enhance efficiency.

● Marketing and Sales

Greenfields’ understanding of the Indonesian market, combined with TH True

Milk’s global branding strategies, creates a powerful marketing synergy. Tailored
marketing campaigns can be developed to cater to local tastes and preferences. A joint
sales force, trained in both companies’ best practices, can effectively promote and sell
the products. Regular training and incentives can boost performance and alignment
with strategic goals.

28
 ● Services

Providing excellent customer service, leveraging Greenfields’ local presence,

and TH True Milk’s service standards can enhance customer satisfaction. This
includes after-sales support, handling consumer feedback, and ensuring product
availability. Implementing loyalty programs tailored to Indonesian consumers can
increase brand loyalty and repeat purchases.

Step 3: Market Entry & Launch

Business goals

- Establish a nationwide distribution network within 18 months.

- Launch 2-3 new product lines (e.g., flavored milk, yogurt) within 2 years based
on market response.
- Capture 5-10% market share in Indonesia's fresh milk segment within 3-5
years.
- Establish a strong brand reputation for TH True Milk products as high-quality,
fresh, and HALAL-certified.

When TH finally enters the Indonesian market, there is a need to make plans
for Marketing and Sales Strategy, Distribution Network, Product Launch, and
Promotions in advance in order to widely bring its products to Indonesian customers.

TH True Milk and Greenfields focus on maintaining their competitive edge and
expanding their market presence. This involves continuous improvement and
innovation by investing in R&D to develop new products and enhance existing ones
based on consumer feedback, optimizing operational processes for increased
efficiency, and staying agile to adapt to market trends. Additionally, the joint venture
aims to expand geographically within Indonesia and diversify its product offerings to
include new lines such as flavored milk, yogurt, and cheese. The phase also explores
regional expansion opportunities into neighboring Southeast Asian markets, ensuring
sustained growth and relevance.

4P Strategy

● Product

Focus on Fresh Milk: Launch with 2-3 core fresh milk product lines (e.g.,
whole milk, low-fat milk, skim milk) all proudly displaying the HALAL certification
on packaging. These products will be priced at a 10-15% premium compared to
established competitors like Frisian Flag Indonesia.

29
 Lactose-Free Options: Introduce 1-2 lactose-free milk varieties within the first
year, also featuring the HALAL certification. These can be priced at a 20-25%
premium to reflect additional processing costs.

Limited Edition Flavored Milk Options: Launch 1-2 limited-edition flavored

milk options (e.g., strawberry, chocolate) every quarter to cater to evolving consumer
preferences and generate excitement. These limited editions can be priced at a 5%
premium over core products and will also be HALAL certified.

Packaging Innovation: Invest in high-quality, tamper-evident packaging with a

shelf life of at least 30 days. Packaging will prominently display the HALAL logo and
emphasize product freshness for distribution efficiency across Indonesia.

Potential for Co-Branded Products (Year 2+): Explore co-branding

opportunities with Greenfields to develop unique yogurt or cheese products leveraging
their existing expertise in those categories. All co-branded products will be HALAL
certified.

● Price

Introductory Discounts (Months 1-3): Offer a 15% discount on all TH True Milk
products during the initial launch phase to incentivize trial purchases and stimulate
brand awareness. All discounted products will be clearly marked as HALAL certified.

Loyalty Programs (Year 2+): Implement a loyalty program offering points or rewards
for repeat purchases of HALAL certified TH True Milk products to encourage
customer retention and brand loyalty. Consider tiered loyalty programs with additional
benefits for high-value customers.

Competitive Price Monitoring: Conduct quarterly price reviews of major competitors

and adjust TH True Milk's pricing strategy within a +/- 5% range to maintain
competitiveness while ensuring profitability for HALAL certified products.

● Place

Leverage Greenfields' Distribution Network (80%): TH can utilize 80% of

Greenfields' existing distribution network to reach major supermarkets and modern
retailers across Indonesia within the first 6 months, focusing on stores that cater to
Muslim consumers. They also need to ensure clear visibility of the HALAL
certification on all TH True Milk products displayed in stores.

Expand to Tier-2 Cities (Year 1+): Gradually, TH and Greenfields can expand
distribution to include traditional retailers and smaller stores in tier-2 and tier-3 cities

30
as brand awareness grows, aiming for a national presence within 18 months. Prioritize
stores frequented by Muslim consumers and ensure HALAL certification is
prominently displayed on products.

E-commerce Platform (Year 1): TH and Greenfields can develop their own
dedicated e-commerce platform within the first year to offer online sales of HALAL
certified TH True Milk products and cater to a younger, tech-savvy demographic.
They can also partner with established online retailers like Tokopedia or Shopee to
increase online reach, focusing on platforms popular with Muslim consumers.

● Promotion

Social Media Marketing (Budget: $1 million/year): TH and Greenfields should

develop engaging social media content (including video recipes, product demos, and
influencer collaborations with prominent Muslim figures) on popular platforms like
Facebook and Instagram (target audience: 25-45-year-olds). Besides, they can allocate
a yearly budget of $1 million for targeted social media advertising campaigns,
emphasizing the HALAL certification of TH True Milk products.

Public Relations (Budget: $500,000/year): TH and Greenfields must build

relationships with key media outlets in Indonesia, particularly those catering to
Muslim audiences, and secure positive media coverage for product launches, brand
stories, and participation in industry events related to the halal market. A yearly
budget of $500,000 for public relations activities, highlighting the HALAL
certification and catering to Muslim consumer preferences, should also be allocated.

In-Store Promotions (Budget: $2 million/year): TH and Greenfields will

collaborate with retailers, particularly those targeting Muslim consumers, to
implement in-store promotions (e.g., buy-one-get-one-free offers, product samplings)
during peak shopping seasons and Islamic holidays. Regarding this, they should spend
a yearly budget of $2 million for in-store promotional activities, ensuring clear
visibility of the HALAL certification on all TH True Milk products.

Culturally Sensitive TV Commercials (Budget: $1 million/year): Finally, TH

and Greenfields will simultaneously develop culturally sensitive TV commercials
featuring Muslim families enjoying TH True

3.2.2. Performance measurement

To ensure the success of the TH’s joint venture in Indonesia, it is crucial to

establish a robust performance measurement system.

Market performance: market share, sales growth, and brand awareness

31
 To track these indicators, TH True Milk can conduct market research and
consumer surveys; analyze sales data and market trends; implement targeted
marketing campaigns and promotions.

Marketing & sales effectiveness: marketing campaign, sales conversion, customer

satisfaction

By regularly collecting and analyzing customer feedback; improving customer

service protocols; implementing customer loyalty programs, TH can measure how
effective its strategy is.

Operational efficiency: production, distribution, inventory

TH can measure these KPIs by implementing continuous improvement

programs; using technology for real-time monitoring of operations; conduct regular
quality audits and supply chain reviews.

Financial performance: profitability, cost management, break-even point

Analysis about regular financial audits; financial statements quarterly;

benchmark financial performance against industry standards and competitors are
essential for TH True Milk to acknowledge its financial performance.

Beside KPIs mentioned above, to further understand the performance of its

joint venture in Indonesia, TH can take regular reviews, benchmarking, and
adaptability into consideration.

V. CONCLUSION

Indonesia presents a promising market for TH True Milk's expansion strategy.

The high demand for dairy products, government support for foreign enterprises, and a
massive Muslim population receptive to TH True Milk's HALAL-certified products
create a strong foundation for success.

TH True Milk's robust brand reputation, financial backing, and advanced

infrastructure position them well to navigate the challenges of market entry. Their
HALAL certification presents a significant advantage for reaching Indonesia's Muslim
consumers.

A two-phase approach, starting with direct import to test the market and
culminating in a strategic joint venture with an Indonesian dairy company like
Greenfields, is recommended. This approach allows TH True Milk to gather valuable
insights, establish a strong brand presence, and build a sustainable long-term plan.

32
 By targeting health-conscious families and offering high-quality,
HALAL-certified dairy products at affordable prices, TH True Milk can contribute to
Indonesia's growing focus on environmental and public health concerns.
Implementing a comprehensive marketing strategy that leverages both online and
offline channels, coupled with an efficient logistics and supply chain management
system facilitated by the joint venture, will ensure maximum product distribution and
customer satisfaction.

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