Public Lecture “Jumpstarting Indonesia’s Reform: A Case Study From Building Back Aceh-Nias Better”

What’s Happened in Subprime Mortgage Crisis

Maharani Putri Samsu Wibowo

by Maharani Putri Samsu Wibowo
Future Faculty Development Program
School of Business and Management
Institut Teknologi Bandung

Today, a global economy is in crisis. From all indications, this current global economic turmoil has initially been caused by the subprime mortgage crisis which was aroused in August 2007. What’s happened in subprime mortgage crisis actually?

Subprime is a housing credit in which the lenders have high perceived risks of default, such as those who have a history of loan delinquency or default, those with a recorded bankruptcy, or those with a limited debt experience. Meanwhile, adjustable rate mortgage (ARM) is a mortgage loan where the interest rate on the note is periodically adjusted based on a variety of indices. And the fairytale began when the financial and banking system in U.S had started to give a housing credit to this kind of lenders, and caused a great explosion of the property sector in U.S. Whenever the U.S Federal Bank increased the interest rate, these subprime lenders could not afford to pay the credit created a high default rates on subprime. This situation later led to a downturn in the housing market of the U.S, risky practices in lending and borrowing, and excessive debt levels of both individual and corporate, causing multiple adverse effects to the world economy. The crisis was then worsened along with increasing prices of many global commodities, in particularly oil and gold price.

To cover these debt levels, many companies and financial institutions in U.S have withdrawn their funds from all markets around the world, especially from the stock market. This provocative action was undertaken as the stock indices all over the world were bubbling in the beginning of 2007, and stock is the most liquid (easy to sell) financial instruments. As the result of such an action, many big non-U.S investments banking and financial institutions experienced a black day in the stock market, including Asia’s indices.

For Indonesia’s capital market, the index plunged by 48.069% from 2795.4 (the highest index on 6 December 2007) to 1451.67 (the lowest index on 8 October 2008). This might have been caused of many foreign investors followed by local investors had decided to withdraw a huge capital from IDX (Indonesia Stock Exchange) within a year. The worst crash was happened on 8 October 2008. Within a day, the index was dropped by 10.38% , thus, trading ought to be suspended for two days. IDX became the top loser compared to others, followed by Nikkei (Japan) hooked at the second place.

After the market was closed on 8 October 2008, there was a panic attack from all market players and the government. The president and related ministers had a press conference and made a rush decision to handle the crisis. The government committed to take a serious action for bad speculators who had tried to take an advantage in this crisis and had been proved of cheating in the trading. The next press conference was later held by Bakrie Group members. They made a credit for USD 1, 2 billion to JP Morgan and created loss in their derivatives transactions. Now, several of their companies have become collaterals to JP Morgan. As the latest corporate action of Bakrie Group to pay the credit, they plan to sell some of their ownership in five companies: Bumi Resources, Bakrie Sumatera Plantation, Bakrieland Development, Bakrie Telecom, and Energi Mega Persada. And this decision will make stock prices of these five companies’ even worst.

Innovative Solution in Telecom Industry: A Research to Introduce Mobile Kiosk

Master Thesis by Akhmad Hadian Lukita

Case study: Cooperative distribution of Wireless FWA-CDMA-based Telecommunications service with Small and Medium-size enterprises.

Good news for Wifone industry! A vibrant idea comes across Akhmad Hadian Lukita suggesting better distribution system and more convenient service towards the customers. Within business perspective, this idea applies considerably low-cost but seriously on turnover. A mobile kiosk is set to “get the ball” with 19 months investment return period.

The level of telephone penetration per capita (teledensity) in Indonesia remains low with just 3.3% or seven millions out of 210 million Indonesians. A quarterly report from PT. Telkom (2001) showed that these numbers only represented six large cities: Jakarta, Surabaya, Semarang, Medan, and Denpasar. In this circumstance, many people are still in high-demand for telephone facility.

To increase this teledensity, a major consideration appears and underlines US$1000 to construct an SST (saluran sambung tetap /fixed line unit). What a big numbers to spend! Data from PT Telkom shows that US$ 2, 1 is needed to increase only 1% of national teledensity. And considering this large sum of investment required, Ahmad Hadian Lukita suggests that telephone operator should prioritize its developments in areas with better return of investments.

In his research, Lukita attempts to discover a business formula to increase the interest of small and medium enterprise to take part in this telecommunication industry. Researcher believes that by optimizing the community to be self-employed and actively participating in providing cellular services in their own communities is the appropriate solution to increase teledensity.

However, Lukita limits his work to CDMA (Code Division Multiple Access) service providers with FWA-CDMA network configuration, located in Bandung. The technology itself consists of Mobile Switching Centre (MSC), Base Station Controller (BSC), and Base Transceiver Station (BTS). MSC is an instrument that serves as switching centre that connects directly with BSC. Signal is then transmitted to the BTS Using a media Approach Link. Media Approach link can be a fibre optic network or a radio link. From this BTS, signal is connected with Customer Terminal (i.e. cellular phones or stationary phones).

The following is the structure proposed by researcher to optimize distribution channel for mobile telecommunications service:

Distribution Channel Structure

Therefore, this research formulates a Mobile Telecommunication Kiosk as a suggested solution for small and medium enterprise to join this business.
By using CDMA phones, which apply relatively small amount of investments for hardware and software, the researcher strongly argues that a mobile kiosk can be an alternative business prospect. With relatively similar concept as conventional kiosk selling voucher/provide telephony service, mobile kiosk attempts to “get the ball.” It is designed to actively pursue potential customer rather than passively waiting customer as employed by usual kiosks.

The following is the schematic picture of hardware requirements of mobile kiosk:

Schematic Picture of Mobile Kiosk

To run a mobile kiosk, the investment of equipments would approximately cost IDR 3, 4 million. The business analysis from the researcher shows a predicted gross income at IDR 2, 5 million with a 70:30 sharing allocation (70 for service operator and 30 for the small/medium enterprise) while the return of investment can be obtained within 19 months.
According to researcher, a mutual symbiosis between operators, small and medium enterprises, as well as the community can be developed by employing this suggested proposal. A partnership method that involves operators, small & medium enterprises would result an increase in teledensity rate, something that would be valuable for the community.

For detailed thesis titled Business Innovation for small and medium enterprises’ empowerment, Case study: Cooperative distribution of Wireless FWA-CDMA-based Telecommunications service with Small and Medium-size enterprises, please contact: http://library.sbm.itb.ac.id or visit SBM – ITB Library directly at:

Jalan Gelap Nyawang No.1 Bandung, 40132 – Tel/Fax: 022-2504308/2504897

Decreasing the Gap Between Companies and Customers

By Dr. Reza Ashari Nasution

as Published in Pikiran Rakyat, 21 October 2008 edition.

IN general, manufacturers or companies always need to know the demands from their customers in order to create the right service and products. This condition is inevitably resulted from the knowledge gap between manufacturers and customers. To decrease the gap, companies usually conduct market research, customer relationship management (CRM), and customer experience management (CEM).

Marketing research is an activity which is carried out systematically and objectively to gather information needed to make the right marketing decision. The research includes two practical data, internal and external data.

Internal data consists of all data in the database of the companies whereas  external data contains collected data resulting from interviews, surveys, and industry data. The survey results are used to describe customers’ needs, behaviour, expectations, and perceptions on a certain product, a type of service, or a brand.

Both external and internal data are always needed simultaneously in order to get a complete picture of the current business situation faced. Some external data can be used as internal data as well, adding to the existing data on database of companies, which will be then organised in a system called customer relationship management or CRM.

CRM is a business approach that integrates human resources, processes, and technology to optimise customers’ satisfaction through integral relationships from all interactions with customers. CRM is developed to determine accurate strategies for each customer.

A CRM application consists of three parts, operational, analytical, and strategic. The operational part contains transactional data in an operational level that occurs between a company and its customers. For example, data on the time of purchase, types of products bought, numbers of products bought, and the payment mechanism done by a customer.

Advanced analysis such as wallet share (the revenue from each customer), satisfaction, loyalty, and expenses on customer service can be carried out too. The combination of this data and research results will provide better opportunity to analyse the data to gain  complete information about the customers. This information will be used as guidelines for the strategic part of CRM programme in compiling the most effective strategies.

**

Despite the sophisticated technology, CRM programme has not been able to thoroughly decrease the knowledge gap between companies and customers. The applications of CRM have not been capable to fully grasp the affective aspect of a consumer. Together with the cognitive aspect, the affective aspect is one factor that affects a consumer’s decision.

Until now, there has not been an efficient application which is able to predict affective situations of a consumer. Thus, what a company does is controlling the variety and affective conditions of a consumer under certain circumstances.

Prof. Bernd Schmitt is an expert who is considered as the creator of CEM in companies. He describes CEM as a strategic process in managing a consumer’s experience on a product, a brand, and a company. Moreover, CEM aims to manage the exposure experienced by a consumer from all interactions with the three things mentioned before, creating a positive experience in order to gain positive effects.

CEM put forward the importance of obtaining the above information through a more qualitative method because it is more personal and unique. Although it can be generalised, but it is important to analyse a customer’s experience one by one to identify specific details that degrade customers’ satisfaction.

When it is done integrally, systematically, and closely controlled, those three aspects can decrease the knowledge gap between companies and customers to make the right decisions for customers. Implementing them is determined by natural conditions within the companies (process, product type, management type, etc) that the type, the process and the procedure may vary from one company to another.

However, the writer emphasises that there is no guarantee that companies can 100% predict their consumers because consumers are dynamic human beings and companies are not Gods. ***

The writer is a lecturer at School of Business and Management (SBM) ITB.Pikiran Rakyat, 21 October 2008 edition.

International Conference on Inter-Cultural Management and the Launch of ASEAN Network for Inter-Cultural Management & Economic Studies

International Conference on Inter-Cultural Management and the Launch of ASEAN Network for Inter-Cultural Management & Economic Studies

Management studies have undergone a rapid transformation. However, theories in management science are usually derived from western (northern American and western European) literatures. While the state of scientific development might be more advanced in those parts of the world, application of those theories in a different context – such as the emerging market of Asia– might not always fit well. It requires an understanding of how the context shape management practices in this different environment. Management research with objects of study in this area must carefully look into these aspects.

The issue of culture is a key reason one must note with regard to management practice in a different context. In the past, culture used to be noted only as a residual factor when management practice happened to be different than what it is in the literature or in the common practice in developed countries. But now, with the importance of interdisciplinary studies as a scientific approach – including in management science – culture-based studies emerges as an area which will become part of the mainstream. This is especially true with continuing globalization, where interaction of people across different cultures happens on a daily basis.

An example of issue which is highly sensitive to culture is conflict resolution. Inter-cultural conflicts are often the most difficult to resolve because the expectations of the disputants can be very different, and there is much occasion for misunderstanding. In Western cultural contexts, conflict resolution usually involves fostering communication among disputants, problem solving, and drafting agreements that meet their underlying needs, usually in a direct way. In many non-Western cultural contexts however, direct communication between disputants that explicitly addresses the issues at stake in the conflict can be perceived as rude, making the conflict worse and delaying resolution.

SBM ITB in ASEAN Network for Inter-Cultural Management & Economic Studies

School of Business & Management, Institut Teknologi Bandung (SBM ITB) as the fastest growing business school and part of ITB as one of the centre of academic excellence in Indonesia recognizes the importance of inter-cultural approach to the studies of management and economic. In cooperation with the Asia Research Centre at University of St. Gallen (ARC-HSG) –the top business school in Europe and number one in the German-speaking world– to promote the importance of cultural-based management studies and contribute this development to the society, SBM ITB initiated the ASEAN Network for Inter-Cultural Management and Economic Studies. It has so far garnered support from universities in Vietnam, The Philippines and Malaysia, and currently working to expand the network to other ASEAN countries.

This network aims to attain practice-relevant academic excellence in a socially responsible way for participating institutions through culture-based management and economic research, teaching and practice-training. To achieve this vision, it will develop culture-based research, training and practice-training projects and programs to equip students who will be socially responsible and culturally competent in the evolving context of Asia.

SBM ITB will launch this network on February 10, 2009 in an International Conference on Inter-Cultural Management (IC-ICM) in ITB.

This will be organized as part of the events to commemorate 50 Years of ITB Anniversary (“ITB Golden Anniversary, 1959-2009”). The event will signify the contribution of SBM ITB for ITB on its way toward achieving academic excellence, in particular by showcasing state-of-the-art approach on management studies. The speakers of the conference will be academicians and practitioners who have learned, researched and practiced inter-cultural management in various contexts and situation. Partner institutions from the universities in neighbouring ASEAN countries as well as Indonesia will be invited to also share their thoughts on this topic.

Research Workshop and Visit to Community Development Village

The conference will be linked with an International Research Workshop on February 9, 2009 and a visit to Cisondari Village in Ciwidey, a village as the target of community development activities of SBM ITB students, on February 11, 2009. The workshop is aimed at SBM ITB’s faculty members, students of the new Ph.D. program and Master of Science in Management (MSM) program. The speakers at the workshop have learned, applied and practiced context-based management research, and their academic papers have won awards in various international conferences like Strategic Management Society Conference, International Conflict Management Conference and Academy of Marketing Conference.

The visit to Cisondari will showcase one of SBM ITB’s activities toward equipping its graduates to be socially responsible and culturally competent in doing their management practice. This activity will also be implemented at other institutions participating in the network. The community development project will be a laboratory for the network to examine, practice and learn management within its own specific cultural context, and share it among the member institutions. At the same time, it is also a contribution of academic institutions and business organizations to the society where they belong. The whole set of activities –Research Workshop, International Conference and the Network Launch, as well as Community Development Visit– will build the agenda of SBM ITB to commemorate the 50th Anniversary of ITB. (*)

For futher information, don’t hesitate to contact us at marketing@sbm.itb.ac.id

Apakah Pendekatan Ilmiah Sesuai untuk Manajemen?

Oleh: Utomo Sarjono Putro

Sekolah Bisnis dan Manajemen ITB sudah mengklaim bahwa manajemen adalah ilmu sosial, sehingga harus berbasis pada humanism. Apa karakteristik utama dari permasalahan sosial, dan apakah pendekatan ilmiah sesuai untuk masalah sosial? Bagaimana hubungan manajemen dan ilmu sosial, dan bagaimana pendekatan yang seharusnya dipakai dalam  manajemen?

Apakah itu pendekatan ilmiah?
Manusia adalah makhluk yang selalu bertanya tentang arti  suatu fenomena. Ketika menghadapi suatu fenomena Hasil dari proses bertanya tersebut akan menghasilkan pengetahuan tentang fenomena itu. Apakah semua pengetahuan yang dihasilkan dari proses bertanya tersebut merupakan suatu ilmu?

Artikel lengkap di http://k-center.sbm.itb.ac.id

Diskusi di http://k-center.sbm.itb.ac.id/topics

Is This Blog A Corporate Blog?

Is this a corporate blog? To answer the question, we have to follow a good reasoning, starting with defining the term “corporate blog”.

Now, as suggested by the words, we could easily define that corporate blog is simply a blog which is owned by a corporate. Is that so? Let’s consult wikipedia for this.

A corporate weblog is published and used by an organization to reach its organizational goals.

Whoop, we have to jump to SBM’s goal. Let’s postpone it for a while.

The advantage of blogs is that posts and comments are easy to reach and follow due to centralized hosting and generally structured conversation threads. Currently, all major browsers (including Firefox, Opera, Safari and Internet Explorer 7) support RSS technology, which enables readers to easily read recent posts without actually visiting the blog, which is very useful for low-volume blogs. [1]

Although there are many different types of corporate blogs, most can be categorized as either external or internal.

Ok. I think if it is a corporate blog, then it would be categorized as external.

Internal Blogs
An internal blog, generally accessed through the corporation’s Intranet, is a weblog that any employee can view.

Certainly all the SBM’s employee can view this blog.

Many blogs are also communal, allowing anyone to post to them.

This blog is communal too. There are several contributors listed here.

The informal nature of blogs may encourage:

• employee participation
• free discussion of issues
• collective intelligence
• direct communication between various layers of an organization
• a sense of community

Employee participation? Nope. Free discussion of issues? Yep, that’s just what comments for. Collective intelligence? Intended to. Direct communication between various layers of an organization? I started to think that we are talking two different languages here. A sense of community? Yep, but quite in a different sense.

Internal blogs may be used in lieu of meetings and e-mail discussions, and can be especially useful when the people involved are in different locations, or have conflicting schedules. Blogs may also allow individuals who otherwise would not have been aware of or invited to participate in a discussion to contribute their expertise.[2]

Negative. We have Sharepoint for all these.

External Blogs

An external blog is a publicly available weblog where company employees, teams, or spokespersons share their views. It is often used to announce new products and services (or the end of old products), to explain and clarify policies, or to react on public criticism on certain issues. It also allows a window to the company culture and is often treated more informally than traditional press releases, though a corporate blog often tries to accomplish similar goals as press releases do. In some corporate blogs, all posts go through a review before they’re posted. Some corporate blogs, but not all, allow comments to be made to the posts.

I think we have http://sbm.itb.ac.id as a front line that holds information about our “products”. It is absolutely official in the sense that this blog is not.

External corporate blogs, by their very nature, are biased, though they can also offer a more honest and direct view than traditional communication channels. Nevertheless, they remain public relations tools.

This is not a public relations tools. This is knowledge center tool.

Certain corporate blogs have a very high number of subscribers. The official Google Blog is currently in the Technorati top 50 listing among all blogs worldwide.

Marketers might expect to have product evangelists or influencers among the audience of an external blog. Once they find them, they may treat them like VIPs, asking them for feedback on exclusive previews, product testing, marketing plans, customer services audits, etc.[3]

The business blog can provide additional value by adding a level of credibility that is often unobtainable from a standard corporate site. The informality and increased timeliness of information posted to blogs assists with increasing transparency and accessibility in the corporate image. Business blogs can interact with a target market on a more personal level while building link credibility that can ultimately be tied back to the corporate site.

There, we can tell now that this blog is not a corporate blog.

Who Owns Knowledge?

Open Access

Open access publishing’ is the publication of material in such a way that it is available to all potential users without financial or other barriers. An open access publisher is a publisher producing such material. Many types of material can be published in this manner: scholarly journals, known specifically as open access journals, magazines and newsletters, e-text or other e-books (whether scholarly, literary, or recreational), music, fine arts, or any product of intellectual activity. In this context, non-open access distribution is called “toll access” or “subscription access”.

APQC’s 14th Annual KM Conference and Training

The Knowledge Transfer Revolution

Corporate Blogs

1. Boeing
2. Accenture
3. Yahoo
4. Monster
5. Kodak
6. Yahoo!Search
7. Facebook
8. Flickr
9. Adobe
10. Google
11. Dell
12. Digg
13. Linkedin
14. Ask
15. GM
16. Delta Airlines
17. Amazon
18. AMD
19. Chevron
20. Cisco
21. Coca-cola
22. CSC
23. eBay
24. FedEx
25. Johnson & Johnson
26. Marriott
27. Motorola
28. Nokia (n-Gage)
29. McDonald’s
30. Nike
31. P&G
32. Starbucks
33. Texas Instruments