STRATEGIC MANAGEMENT RESUME

Bank Suddenly Flooded With Money, Entrepreneurs Speaks Out Case

202160173 - Angelica Tania

202160331 - Christopher Young

Overview

Indonesian banks are currently experiencing a surge in liquidity driven by high corporate savings,
rebounding commodity prices, and strong credit growth. Despite economic challenges such as high
benchmark interest rates and weak purchasing power, the banking sector demonstrates strengths in
terms of robust credit growth, high corporate savings, and a strong financial foundation. However,
weaknesses such as political uncertainty, dependency on commodities, and delayed business
expansion pose risks to the sector. Looking ahead, potential opportunities lie in anticipated rate cuts,
political stability, economic recovery, and government policies that support business expansion.
Nevertheless, threats such as continued high interest rates, political instability, global economic
conditions, and regulatory changes could impact business operations and profitability.

SWOT Analysis

Strengths:

● High Corporate Savings: The significant increase in corporate deposits reflects the
strong financial health of the corporate sector. This indicates stability and confidence
in the business environment.
● Commodity Price Recovery: The rebounding commodity prices have led to increased
corporate profits, contributing to higher savings and overall financial strength in the
sector.
● Robust Credit Growth: Despite the high savings, the banking sector is experiencing
strong credit growth, particularly in investment credit and working capital. This
indicates ongoing business investments and economic activity.
● Strong Banking Sector: The well-capitalized banking sector with a high volume of
third-party funds signifies stability and reliability in the financial system.
● Investment in Capital: The growth in investment credit suggests that businesses are
preparing for future expansion, which is essential for long-term growth and
sustainability.
● Optimistic Economic Growth: Business leaders' optimism about achieving 5%
economic growth indicates a positive outlook for the business environment and
potential opportunities for expansion.
● Profit Distribution: Increased corporate profits have resulted in higher dividend
distributions, benefiting shareholders and potentially attracting more investors.
● Corporate Confidence: Despite challenges such as high benchmark interest rates and
weak purchasing power, corporations maintain high deposits, demonstrating
confidence in the banking system and overall financial stability.

Weaknesses:
 ● High Interest Rates: Elevated benchmark interest rates increase the cost of borrowing,
potentially hindering business expansion and investment.
● Weak Purchasing Power: Reduced consumer spending power limits domestic market
growth, affecting businesses that rely on local consumer demand.
● Political Uncertainty: Ongoing political transitions create uncertainty and cautious
business sentiment, which can impact investment decisions and overall economic
stability.
● Delayed Business Expansion: Economic challenges have led to postponed business
expansion plans, potentially affecting long-term growth and competitiveness.
● Dependency on Commodities: The heavy reliance on commodity prices for financial
health exposes businesses to volatility and market fluctuations, posing risks to
profitability.
● Savings Over Investment: High corporate savings suggest a preference for liquidity
over immediate investment, potentially limiting opportunities for growth and
innovation.
● Slow Individual DPK Growth: Lagging individual deposit growth compared to
corporate growth may indicate challenges in attracting and retaining individual
customers in the banking sector.
● Economic Challenges: Broader economic issues such as inflation and global market
conditions pose risks to businesses operating in Indonesia, affecting profitability and
sustainability.

Opportunity:

● Potential Rate Cuts: Anticipated reductions in the central bank's interest rate could
stimulate borrowing and investment, potentially boosting economic growth and
business expansion .
● Political Stability: A smooth political transition could enhance business confidence
and encourage investment, leading to a more stable business environment .
● Economic Recovery: Continued recovery in commodity prices may further increase
corporate profits and savings, providing opportunities for businesses to expand and
invest .
● Investment in Real Sector: There is potential for increased investment in the real
sector towards the year-end, which could drive economic growth and business
activities .
● Government Policies: Supportive government policies have the potential to enhance
economic growth and create a favorable environment for business expansion .
● Market Expansion: As conditions improve, businesses have opportunities to expand
both domestically and internationally, tapping into new markets and increasing
profitability .
● Technological Advances: Adoption of new technologies can improve efficiency,
productivity, and competitiveness, enabling businesses to stay ahead in a rapidly
evolving market .
 STRATEGIC MANAGEMENT RESUME
Bank Suddenly Flooded With Money, Entrepreneurs Speaks Out Case

202160173 - Angelica Tania

202160331 - Christopher Young

● Infrastructure Development: Increased infrastructure projects can stimulate economic

growth, create job opportunities, and drive business activities in related sectors .

Threats:

● Continued High Interest Rates: Persistent high interest rates may dampen business
investments by increasing borrowing costs and limiting access to credit .
● Political Instability: Any political unrest or instability could negatively impact
business confidence, leading to uncertainty and potential disruptions in business
operations .
● Global Economic Conditions: Adverse global economic conditions, such as
fluctuations in commodity prices and export markets, can affect the financial health of
businesses operating in Indonesia .
● Inflationary Pressures: Rising inflation can erode purchasing power, increase business
costs, and impact consumer demand, affecting overall business performance .
● Regulatory Changes: Unfavorable regulatory changes may disrupt business
operations, increase compliance costs, and impact profitability in the banking sector .
● Market Volatility: Fluctuations in financial markets can affect corporate savings and
investments, leading to uncertainties in financial planning and investment decisions .
● Environmental Risks: Natural disasters or environmental issues can disrupt business
activities, especially in the commodity sector, impacting production and supply
chains.
● Competition: Increased competition from domestic and international businesses can
put pressure on profit margins, requiring businesses to innovate and differentiate to
maintain market share

With the SWOT Analysis, there are opportunities that Indonesian can implement, such as

● Digital Transformation: Embrace technological advances to enhance operational

efficiency, improve customer experience, and stay competitive in the evolving
banking landscape.
● Infrastructure Investment: Support infrastructure development projects to stimulate
economic growth, create opportunities for financing, and contribute to overall sectoral
development.