STRATEGY MANAGEMENT

Strategy Analysis of Garuda Indonesia

Lecturers: Risris Rismayani, S.MB., S.Pd MM & Yudi Pramudiana, ST., MM

GROUP MEMBERS:

Zakiyah Ulfah (1201130437)

Raihan H. D. Widodo (1201130438)
Bobby Romadhoni (1201130442)
Reynaldi Ahmad Juliawan (1201130449)
Karunia Apriliani R. (1201130461)
Husein Nasimov (120030467)

International ICT Business

About Garuda Indonesia

In 1950, Garuda Indonesia officially became a state owned company.

Garuda Indonesias fleet continued to grow and eventually made its
first flight to Mecca carrying Indonesian hajj pilgrims in 1956.
In 1965, the first flight to European countries started was made with
Amsterdam as the final destination.

Vision and Mission 2009 - 2013

A strong distinguished
airline through
providing quality
services to serve
people and goods
around the world with
Indonesian hospitality.

The flag carrier of Indonesia that

promotes Indonesia to the world,
supporting national economic
development by delivering
professional air travel services.

LONG TERM OBJECTIVE

Maintain the growth and become more competitive

not only nationally but also internationally.
Continue to expand its network, reaching fast
growing economic cities and new tourist
destinations.

Strategies that have been implemented

Garuda Indonesia uses Balance Score Card (BSC)
approach and determined strategic objectives which were
grouped into 4 perspectives; Financial perspective,
Customer perspective, Internal Process, and Learning &
Growth perspective.

BUSINESS FRAMEWORK MODEL

1. CUSTOMERS

First Class
Economy Class

2. VALUE PROPOSITION

Uniqueness statement that the organization provide to its Customer

Segment.
Garuda Indonesia introduces New Service Concept in its First Class
service to the standard of Skytrax 5-Star.

3. CHANNELS

Kiosk Counter which is a moveable sales counter and managed by

third parties. Generally Kiosk counter was located at hotel lobby, mall
and office building.
Garuda Online Sales (GOS) is responsible to make planning,
establishing policy, evaluating and leveraging sales and marketing
through GOS Member with Internet facility.

4. CUSTOMER RELATIONSHIP

Garuda distribute 100,000 re-cycle books to SD Negeri 28 Maripi, Ds

Distrik and Pondok Pesantren Hidayatullah, South Monokwari.
Garuda gave away Groceris in 2012 as a concern over the
skyrocketing prices of daily necessities (groceries) due to the rising
price of fuel oil.

6. KEY RESOURCES

Finance:

Physical:

Planes and spareparts from either Boeing or Airbus

Intellectual:

Raising money from investors or lend it from bank

Patent, copyrights, trademarks

Human Resources:

Pilot school, flight attendant, accounting, marketing and

other school

7. KEY ACTIVITIES (VALUE CHAIN)

Support Activities

Human Resources

Corporate culture that will encourage the

creation of a conducive working
environment.
Talent management that will ensure the
availability of the Companys future leaders.
Improving and expanding the role of people
manager who is able to be the competent
mentor and coach
Number of employee in 2013 was 7,861
employees, grew by 12,2% compared with
the number of employee in 2012.

Support Activities
Information Technology

Improving capacity, reliability, and security

related to network to support the operational
readiness of Amadeus Altea.
Completing the implementation of Enterprise
Service Bus, Operation Data Stores, and MQ
Server.
Migrating PSS ARGA to Amadeus Altea. And in
the same year completing the Reservation,
Inventory, and Ticketing and Departure Control
System.
Completing the Integrated Contact Center to
support passenger services in comply with the
SkyTeam standard.

Support Activities
Procurement & Logistic System

Joint Procurement that support the effectiveness and

maintain the quality standards in order to join the
SkyTeam Global Alliance.
Garuda has intensively developed a system based
on Materials Management & Supplier Relationship
Management.
Barcode systems and the development of ECatalogue to improve the effectiveness of
procurement and logistic system.

The Company also optimizing the use of web-based

Electronic Procurement.

Primary Activities
Marketing & Sales

One of marketing
activities conducted by
the Company is the
Garuda Indonesia
Travel Fair.

The 2013 GATF

managed to generate
revenue of more than
IDR 70 billion.

GATF is Garuda
Indonesias annual
exhibition held in
various regions with
its peak in Jakarta.

For Garuda Indonesia, the

gain from increased corporate
sales was to have sustainable
captive market, aside from
reduction of distribution cost
and expansion of market.

Primary Activities
Service

Pre Flight: First Class Lounge where Garuda

Indonesia became the only airline in Indonesia offering
this service.

In Flight: The additions of Boeing 777-300 were

equipped with new service concept that is intimate,
warm, and luxury.

Post Flight: Premium Arrival Lounge and Baggage

Collection.

8. KEY PARTNERS
Airbus & Boeing
They are Garudas key partners and also suppliers, they provide
airplane and its spareparts
Garuda Indonesia has more than 1000 partners all around the world,
some of them are:

9. COST

Total cost efficiency in 2013 amounted to Rp 124

billion, significant increase of 41% from Rp 88
billion in 2012.
Garuda managed to save the use of fuel up to
18.5 million liters in 2013. Total fuel burn in 2013
was recorded at 1,371 million. The increase was
triggered by intensified operation, of which flight
frequency increased by 22% while Available
Tonne Kilometer (ATK) also escalated by 16%.

(cont.)

Most important cost inherent: Airplane cost

Most expensive key resources: Airplane and its spareparts
Most expensive key activities: Supporting activities; procurement &
logistics
Garuda Indonesia is a value driven business, it focuses on value
creation, premium value proposition

SOURCE OF COMPETITIVE
ADVANTAGE

1. INTERNAL
Human resources
Corporate culture that will encourage the
creation of a conducive working environment
Service
Provides First Class Lounge service
Logistics and Operation
Joint Procurement that support the effectiveness
and maintain the quality standards

(cont.)
Information Technology
Completing the Integrated Contact Center to support passenger
services in comply with the SkyTeam standard

External
Competitors
Garuda has either local or international competitors that operate
the same route with them

Customers
Customers or target market of Garuda Indonesia are very wide spread.

Market Trends

World market trends now are moving extremely. Because of the economic crisis,
now people are preferred to travel in short haul more than long haul. Short haul
mean people are travel in regional around the country.

Potential Limitation
There are a lot of potential limitations to make
success this project.

Time Consuming

This project is a really time consuming project.

Budget

This project also needs a big amount of money.

Technology Integration

Technology integration is another limitation of this

project.

Internal Assessment

Rivalry Among Competitor

The rivalry among competitor is very tight. The Ministry of
Transportation of Republic of Indonesia has noted that competition in
the airline industry will be increasingly fierce and accompanied by the
increased number of users. In 2013, the number of foreign airlines
companies entered Soekarno Hatta Airport was 37. (Source: Airport
Authority).

Barriers to Entry
The aviation industry in Indonesia in 2013 is still considered prospective, in line with the economic
growth and the increase in purchasing power. The increasing demand for air travel has prompted
many airlines companies to join the competition in Indonesian aviation industry. More affordable
ticket prices, as well as more choice of airlines, have made more and more Indonesian people
choose flight as the main mode of transportation. So we can say that the barriers to entry this
industry is low.

Availability of Substitutes.
In the aviation industry in Indonesia theres no perfect substitutes. Because Indonesia is an
archipelago state, it will be hard to travel from island to island by trains, cars, or buses. Well, ship
can be an option but it will took a too much time even though the tickets are cheaper. Since airplane
tickets now are more affordable, and travelling by airplane is so much faster and the passenger will
not get tired on the way to their destinations, customers prefer to travels by airplanes than ships. It is
for domestic route. As for international routes, of course airplane is very preferable.

Power of Supplier
Supplier power in the airline industry is high as there are only a handful of suppliers. Additionally,
aircrafts must be ordered far in advance. The airlines company has only two primary choices for
supply of their jets which is either the Airbus or Boeing. Due to this reason, the supplier has
significant power. The long term nature of these purchases creates a long-term relationship whereby
the airline is often motivated to purchase the same kind of jets always.

Power of Buyer
Power of buyers is significantly high in the airline
industry. This is because consumers are given the
privilege of searching for the lowest flights available on
the internet and to complete the transaction without an
intermediary. Buyer power increases because of this
reason.

SWOT ANALYSIS

Garuda Indonesia has successfully migrated to

the new PSS system called Altea developed by
Amadeus, which has been used by 8 of the 19
airlines members of SkyTeam.

Garuda Indonesia passengers now can fly to

more destinations in the world using SkyTeam
networks with optimal comfort and in convenient
way.

SWOT Analysis
Strength

What is Amadeus Alta ?

A complete Passenger Service System that will help
you turn your strategy into tangible results.
It offers full reservation, inventory and departure
control capabilities, and delivers a uniquely integrated
solution.

SWOT Analysis
Weakness

The expensive price ticket that they

offered.
The lack of Human Resources
Need more pilot
Customer Relationship Problem
Customer still have complaint on Garuda
services especially in :
1)Dated entertainment system
2)Pilot announcements
3)Unexciting lounges
4)No frequent flyer program and
public perception.

Financial problem
US $1.2 milliard estimated to go down 18%
because of the decline of sales.

SWOT Analysis
Opportunities

On March 5, 2014, Garuda Indonesia will officially

become the 20th member of the SkyTeam
alliance, an alliance of global airlines. This means
that the opportunities for Garuda Indonesia to carry
passengers from abroad will be even greater.

SWOT Analysis
Threat

Global economic crisis still poses serious

threat mainly arises from the recovery
process in Europe and the weakening of the
U.S. economy due to tightening of public
spending program
Sizeable fleet expansion in 2013 brought
less optimal results given high domestic
inflation and weakening of Rupiah against
other global currencies.
Limited infrastructure of airports may
potentially interfere the achievement of the
Companys operational targets.

5 PORTER GENERIC STRATEGIES

Garuda Indonesia Airline use Best Value as a

generic strategies.
That offers services to a wide range of customers
at the best price-value available on the market.
The best value strategy aims to offer customer a
range of services at the average price available
compared to a rivals prices such as a ticket and
cabin luggage.

Compared with AirAsia. Garuda Indonesia become a number one

airline that have best services in domestic or international route.
Garuda Indonesia has a expensive price, its equal with the services
that Garuda Indonesia give to they customers.

VERTICAL INTEGRATION

Forward Integration: Garuda Indonesia is not allowed to

do forward integration by the government. They once tried
to integrate with PT. Abacus to do dual access but they got
busted and got fined with Rp. 1 Billion.
Backward Integration: Garuda Indonesia established PT.
Garuda Maintenance Facility Aero Asia 26 April 2002. It
runs repair and maintenance service for their own internal
and external airplane components.
Horizontal Integration: Garuda Indonesia established PT.
Citilink Indonesia in 6 January 2009 as their effort of doing
horizontal integration. Its purpose is to reach consumer
with low-cost flight preference whereas Garuda Indonesia
itself provide premium flight.

MARKET INTENSIVE

Market Penetration: Garuda Indonesia has done market penetration

effort not only in local market but also in global market to expand the
market they targeted. For example, Maintain the image of Garuda as a
full service carrier in Indonesia and becoming a member of SkyTeam
Alliance
Market Development: Proved in 2012, Garuda has done market
development effort. The company planned business development by
focusing on fulfilling the purpose of being a member of the Global
Alliance in order to improve the market and also to overcome the
challanges of the increasing price of fuel and increasing number of
competitor in the airline industry.
Product Development: In implementing this strategies Garuda has
developed its fleet according to the growth and the potency of
International and National market and also renewing and simplyfying the
type of airplane being used.

DIVERSIFICATION

Related

Unrelated

PT Citilink Indonesia was founded in 2009 and

engaging in the business of low cost carrier.
Citilink obtained Scheduled Commercial Air
Transportation Permit No. SIUAU/NB-027 on
January 27, 2012 and Air Operator Certificate
(AOC) Number AOC/121-046 on June 22,
2012 from the Ministry of Transportation.

Computerized Reservation System (CRS). PT

Aero Wisata was established in Jakarta on
June 30, 1973 with a mission to develop
businesses related to tourism and hospitality
industry. To support this mission, Aero Wisata
has some subsidiaries engaged in hotel,
catering service, land transportation, agency
services, as well as tours & travel services.

MATRIX(ES)

Competitive Profile Matrix

Critical Factor
Issues

Weight

Garuda Indonesia

Lion Air

Rating

Weighted Rating
Score

Rating

Weighted Rating
Score

Technology

0.15

0.60

0.60

Advertising

0.05

0.20

0.20

Price

0.13

0.26

0.39

Facility

0.12

0.36

0.36

Services

0.25

0.75

0.50

Flight Route

0.03

0.09

0.09

On Time

0.10

0.20

0.10

Security

0.17

0.51

0.17

TOTAL

2.97

2.41

BCG MATRIX
Garuda Indonesia control in 50% market domestic
airplane. Due to expand in customer service and
business relations with other airline companies,
Garuda Indonesia become an important domain in
International Market. For give services in the largest
market, Garuda Indonesia has 40 branches company
in Indonesia , 38 branches company in which the
other country, and 13 representative office. Also
Garuda Indonesia has 30 route y aviation and 24
route international aviation.

SPACE MATRIX
Financial Position (FP)

Ratings

liquidity

Assets turnover

Earning per share

High return on investment

Total

13

Industry Position (IP)

Ratings

Growth potential (High market needs)

Profit Potential

Recourse Utilization

Leader In Innovation

Total

14

Stability Position (SP)

Ratings

Dollar in Rupiahs Rate

-2

Minimum wage for labor ( high rate of labor strike )

-3

Economical condition

-2

Total

-7

Competitive Position (CP)

Ratings

Has a huge market share in Indonesia

-4

Good Brand Image in Indonesia

-2

High frequency of marketing campaign

-3

Total

-9

Constructing Matrix

FP Average is 13 : 4 =
3,25
IP Average is 14 : 4 =
3,25
SP Average is -7 : 3 =
-2.33
CP Average is -9 : 3 = -3

Directional Vector
Coordinate :
o

x-axis : 3,25 2.33 =

0.92
y-axis : 3,25 3 = 0.25

FP

CP

0,2
5

IP
0,9
2

SP

Conclusion
After we calculate the average of each position and also found the x and y
coordinate, we get that the line is in the top right side. It means the most
appropriate strategy for APLN is aggressive strategy.

Add Flight Routes to Europe and US

Add Flight Routes from and to East Asia, Middle

East and Pacific Asia

Key Factors

Weight

AS

TAS

AS

TAS

Opportunities
Member of Skyteam Global Alliance

0.20

0.80

0.80

Threats
Recovery process of Europe
Weakening of The US economy
High domestic inflation
Weakening of Rupiah against foreign currencies

0.25
0.25
0.15
0.15

3
3
_
2

0.90
0.90
_
0.20

2
2
3
3

0.50
0.50
0.45
0.30

0.75
0.90

1.00
Strength
Migrated to the new PSS system called Altea
Usage of SkyTeam networks

0.25
0.30

3
3

0.75
0.90

3
3

Weakness
Expensive Price
Lack of human resource
Need more pilot
Customer relationship problem
Financial problem
Total

0.05
0.10
0.05
0.05
0.20
1.00

_
_
_
2
3

_
_
_
0.10
0.60
5.15

_
_
_
3
2

Quantitative Strategic Planning Matrix

0.15
0.40
4.75

Internal Factor Evaluation Matrix

No.

Strength

Weight

Rating

Weighted
Rating
Score

1.

Installing new PSS system called Altea

0.15

0.2

2.

Passengerscan fly to more destinations in the

world using SkyTeam networks

0.05

0.15

3.

Offering premium proposition to Garuda

Indonesias product

0.15

0.45

4.

Aircraft Maintenance
Management Division

0.1

0.4

No.

Weakness

Weighted

Rating

Weighted
Rating Score

1.

The expensive price ticket

that they offered.

0.05

0.10

2.

The lack of Human

Resources

0.15

0.15

3.

Need more pilot

0.05

0.05

4.

Customer relationship
problem

0.10

0.10

5.

Financial problem

0.2

0.4

TOTAL

2.00

External Evaluation Matrix

Opportunities

Weight

Rating

Weighted Rating Score

Economic Development

0.20

0.80

International Market

0.10

0.30

High - Technology

0.15

0.45

High Barrier Entry

0.15

0.60

Competitive environment

0.15

0.45

Substitute Lower Price

0.10

0.30

Political Condition

0.05

0.10

THREAT

Total

3.00

Internal External Matrix

Internal External Matrix

Garuda Indonesia prescription for divisions that fall into cells II, since
EFE is 3.00 and IFE 2.00.
Garuda Indonesia can use grow and build strategy.

Garuda Indonesia is in quadrant IV, diversification. It shows Garuda

Indonesia has a competitive advantage in the competitive market that is
increasingly intense aviation industry from year to year. Take the
advantage owned Garuda need to be able to compete. Garuda Indonesia
has more power in the field of technology. That power should be
maximized in order to provide different services and can seize the market
in the aviation industry.

SWOT Matrix

Opportunity

Strengt
h
Diversific
ation

Weakne
ss

Threat

INTERNAL/EXTERNAL

STRENGTH

WEAKNESS

1.

1.

2.
3.
4.
5.
6.

Increasing the role of

people manager
Implemented IBE (internet
booking engine)
Optimalitation Intergrated
operation control (IOS)
Push the inovation for
create high valueadded
products
Develop customer
relationship management
Promotion from digital and
social media

2.
3.

Technical factor and flight

operations like limitation the
amount of cockpit and cabin
crew
Garuda indonesia has a
weakness a proximately
hundred pilot annually.
Garuda depend on
automatically system for
running the business.

OPPORTUNITIES
1.
2.

3.

STRATEGY S-O

The inscreasing
1.
economi growth
The new fleet ranks
supported leading edge
technology and fuelefficient
potential in the
international market will
be more powerful when 2.
combined with the
company global alliance

STRATEGY W-O

Provide training and

1.
development of
managers that
employees can develop
competencies that
affect the performance
of employees in the
company rise.
Innovations on the new
fleet for the company to
improve efficiency in the
future

Recruitment cockpit,
cabin crew and pilots to
avoid further delays to
the Garuda Indonesia
flight schedule and can
increase the number of
its flights.

Threat

Strategy S-T

Strategy W-T

1.

1.

1. The addition of the pilot,

cockpit and cabin crew to
minimize delay and give
satisfaction to the users of
transport services by
increasing the number of
flights and services rendered,
as well as making flight
service users to remain
competitive with other
transportation services even
have competitive advantages

2.

Political situation
of a country or
place, can affect
the procurement
route to the venue
Land and sea
transport
equipment
cheaper than
airplanes

2.

Application of the
new IBE to remain
competitive with its
other
transportation
services
Do CRM
development
company to
maintain user
loyalty Garuda
Indonesia flight
services

3.

4.
5.

Competitive conditions 3.
tend to increase the
national aviation
industry and
international as well as 4.
the application of treble
Udder space (open sky)
ASEAN secure breath.
Strong capital needed
to plunge into the
aviation industry.
Aviation industry
creditors lend funds in
large quantities and the
average in the form of
long-term debt

Forming mindset that

Garuda Indonesia
deliver customerfriendly service
Update flight
information via social
media at the web when
the tread cancellation
terming

FORMULATE GENERIC STRATEGY

In case, Garuda Indonesia become Focus Strategy. It means

that the company focus in how to offer the best airline service
with prestige and pride to own.
In addition special attention to a service or a narrow line of
services or to the segment of the market that gives the
company a competitive edge. The objective is to better serve
the targeted market through concentration of organizational
resources on such a market.
The target market can further be segmented into such
dimensions as demographics (age, gender, education, religion,
income, life-cycle stage), lifestyles (similarities in attitudes,
interests) or other dimensions.

MARKETING

Market Segmentation
Garudas new regional jets and turboprops will compete
primarily against their competitors. While the regional jets will fly
under the main Garuda brand and operate under a full-service
regional model with dual-class configuration, the turboprops will most
likely be delivered in single-class configuration

(cont)

Gardua see a need to cover all sectors of Indonesias domestic

market
Serving Indonesias fast-expanding middle class, demand for fullservice travel is also expected to grow as wealthy Indonesians travel
more frequently
Many wealthy Indonesians insist on flying first class, even
domestically, creating a need for some carriers to continue offering a
two-class cabin even on the shortest routes.

High Cost

MARKETING

Garuda

Market Proposition

Bad
Facility

Good Facility

Citilink

Lion Air

Low cost

Air Asia

Assets

Total assets 2011: 2,083,006,809

Total assets 2012: 2,517,997,766
Total assets 2013: 2,953,784,952

Capital

Total equity 2011: 922,797,776

Total equity 2012:
1,114,960,078

Total equity 2013:

1,117,148,117

R&D

Objectives
1. To replace core airline system (PSS);
2. To provide technology required to join the SkyTeam alliance.
3. To develop a reliable platform of technology for all area of business.
4. To facilitate in making differences for certain business area.
5. To develop IT capability to significantly improve Garudas ability to
implement various IT initiatives

Cost Contributor

At the end of 2013, Garuda Indonesia gained revenue by

3.716.076.586
The cost of R&D is 306.221.089
Cost contributor:

Technology service used in

Garuda Indonesia

IOSA (IATA Operational Safety Audit) as proves that the airline has fulfilled global best
practice in safety and security procedures.
Individual touch-screen LCD TVs for executive and economy class passengers and equipped
with Audio Video on Demand (AVoD). AVoD is an entertainment system that offers latest
movie and audio tracks at your fingertips.
Garuda Indonesia is planning to provide wireless Internet service (Wi-Fi) for their eight new
aircraft at the end of this year.
With the 24-hour pass, a passenger is also entitled to enjoy TV channels: BBC, CNN, CNBC,
Euronews and NHK.

8 Principles Of Technology
All of which are intended to support the achievement of the Company, as well as to differentiate
whenever needed.
The eight principles are:

Choosing a system that complies with the aviation

industry standard and applying it to functions that allow

Garuda Indonesia to be competitive.

Choosing a dynamic IT systems with the best-in-class

Capabilities to applied on functions that are required to have of competitive differentiation. For
other functions, the initiatives focused on using an integrated system on a platform that has been
proven reliable and need not customization.

Developing flexible and re-usable IT architecture, and facilitate easy access for passengers to
get services and information through various channels.

The implementation of Garuda Indonesia IT initiatives is

based on scale of priorities, focusing on the following key
objectives:

To replace core airline system (PSS);

To provide technology required to join the SkyTeam alliance.
To develop a reliable platform of technology for all area of business.
To facilitate in making differences for certain business area.
To develop IT capability to significantly improve Garudas ability to implement various IT
initiatives

Garuda
Business
Ethics Issues
Indonesia

2011 Issue
Garuda Indonesia launched Business Ethics and Work Ethic on
February 10, 2011, marked by the signing of commitment by the Board
of Directors and the Board of Commissioners, the Vice President, and
the Senior General Manager of Branch Offices. The book of Business
Ethics and Work Ethics of the Company was ratified by the President
Director Decree No. JKTDZ/ SKEP/50023/11 dated 11 March 2011.

2013 Award Governance

Corporate Governance Perception Index (CGPI) Award In 2013,
Garuda Indonesia participated in the research of GCG implementation
rating held by The Indonesian Institute for Corporate Governance (IICG)
under the theme Good Corporate Governance in the Perspective of
Knowledge. It is the fifth participation of Garuda Indonesia. Garuda
Indonesias score was 85.84 and named as Most Trusted Company.

Business Ethics and Work Ethics provides

Corporate Identity, which contains the Companys Vision and Mission, and Corporate
Values, Key Behaviours to be upheld by employees.
Commendable Behaviour, describing relation with fellow employees, customers, business
partners, shareholders, and Competitors.
Compliance, describing transparency of communication and financial information,
handling conflicts of interest, gratification control, protection of the Companys assets and
confidentiality.
Employee responsibility, describing employees responsibility towards society,
Government and Environment.
Enforcement of Business Ethics and Ethics Code, describing Whistle Blowing System
(WBS), sanctions for violations, socialization of Business Ethics and Work Ethics, the
signing of Integrity Pact by all employees.

WBS Report
In 2013, there were 63 incoming reports to the WBS
website www.ga-whistleblower.com System.
the incoming reports in 2013 can be categorized as follows:
29 unsubstantiated reports (46%)
19 complaints related to services/operations (not related to fraud or
breach of corporate ethics) (30%)
15 substantiated reports of fraud and ethics violations(24%)
From 15 substantiated reports, 9 were followed with by investigation by the
designated investigator. From the investigation, 1 report was proved and 1 was
not. Based on these data, the percentage of proved reports reaching 7% of the
total number of incoming reports through WBS.

How to manage WBS in GA

Report

Complaint
s

Customer
input

Investigati
on

Followed
up

Evaluation on Whistleblowing System

Since its commencement in 2010, improvements on the

implementation and management of WBS continues to
be carried out in various ways, including through
dissemination aiming at increasing the understanding
and awareness of the Company or stakeholders,
improving regulations, the use of independent party, and
improvement on information technology for WBS.

Consumer Protection Commitment

Principles and Policies

Customers are the Companys major stakeholder, and therefore the Company
strives to continuously improve the quality of service to its passengers as well as
provide optimum protection for passengers. Service quality improvements are
pursued on all stages of the passenger travel chain, comprising the pre-journey,
pre/in/post flight, and post-journey stages.

Convenient Access
The Company provides a number of access to submit Customer Voice in the form of Compliment,
Suggestion and Complaint.
The accesses are:
Website GA

Suggestion Form
One of the accesses for Customer Voice is attached in the inflight magazine Garuda Indonesia,
which is the suggestion form. It is the media used to survey Garuda Indonesias customers
satisfaction.

CSR
Vision

Managing an effective and appropriate

Corporate Social
Responsibility program so as to provide
positive impact on
society, environment, and the Company.

Mission

Committed to economic, social, and

environmental
community empowerment in Indonesia
through innovative
sustainable programs

Garuda Indonesia Cares

Program is a form of implementation of the Triple Bottom Line

concept (Economic, Environment, and Social), manifested by the
Company through the efforts of balancing the sustainability of
profitability (economic ), the welfare of society social, and
environmental preservation (environment).

Garuda Indonesia Cares for Economy

Socio-economic progress of the community living in the vicinity of where

Garuda Indonesia operates is one of the ways to indicate the success of a
CSR program.
Garuda Indonesia Partnership Program consists of two components, namely:
1.

2.

Providing soft loans to finance the working capital or the purchase of fixed assets in
order to increase production and sales,
Providing free coaching for education, training, apprenticeship, promotion and other
matters related with partners productivity and managerial improvement.

Garuda also provides training for established partners through

education, training, apprenticeship, and promotion. Garuda
Indonesia has disbursed IDR 264 million in 2013. Garuda
Indonesia also helped its partners to conduct promotion activities,
such as through exhibitions which involved partners. In 2013, the
activities included:
1. 6th Adiwastra Indonesia 2013
2. Bazaar Ramadhan 2013
3. Garuda Indonesia Travel Fair (GATF) 2013
4. APEC Exhibition in Bali
5. Exhibition to commemorate the anniversary of IIPBUMN and Mothers Day

Garuda Indonesia Cares for the Community

Development

Education, Training and Sport

Development and Training Program for Weaving Artisan

School Renovation Program and Educational Facility Aid
Garuda Indonesias Commitment Towards Tennis through Garuda Indonesia
Tennis Open

Health

Concern for Cervical Cancer and AIDS in Eastern Indonesia

Garuda Indonesia Cares for the Health of Kapuk Muara Community

Corporate Governance Structure

In general, the corporate governance structure in Garuda Indonesia obeys and

complies with the prevailing regulations, comprising General Meeting of
Shareholders (GMS), the Board of Commissioners, and the Board of Directors.
Each organ has the rights and obligations as well as role in the implementation of
Good Corporate Governance set forth in the Articles of Association of Garuda
Indonesia and/or stipulated in the prevailing laws and regulations.
GMS is the Companys highest decision making body and a forum for
shareholders to exercise their rights, while observing the provisions from the
Articles of Association and the prevailing law and regulation.

GMS shall not intervene in the conduct of duties,

functions and authority of the Board of Commissioners
and the Board of Directors.
The Board of Commissioners is the organ in charge of
and collectively responsible for overseeing and providing
advices to the Board of Directors regarding the
management policies, including ensuring that the
Company has been implementing good corporate
governance.

Implementation of Principles of Good

Corporate Governance
The Company prioritizes its sustainability and the interests of stakeholders.
The Company also assigned a priority to its compliance with the applicable
laws and regulations. As a State-Owned Enterprise (SOE) the Company
implements the principles of good corporate governance in order to grow, to
flourish and to sustain. The GCG implementation in the Company aims to:
a. Optimize the Companys value in order to have a strong competitiveness
so that it can maintain its existence and sustainability as well as achieving its
goals and objectives;

Implementation of Principles of Good

Corporate Governance
b. Promote a professional, efficient and effective management, as well
as empower the function and enhance the independence of the
Companys organ;
c. Encourage the Companys organ to make decisions and to take
actions based on high moral values and compliance with laws and
regulations, as well as awareness of social responsibility towards its
stakeholders, and environmental sustainability;
d. Promote the Companys contributions to national
e. Promote conducive climate for national investment.

Implementation of GCG principles:

Transparency
In maintaining objectivity in its course of business, the Company shall provide
material and relevant information, in a way that is easily accessible and be
understood by stakeholders.

Accountability
The Company seeks to report its business performance in a transparent and fair
manner, through proper and measurable administration in accordance with the
interests of the Company, while taking into account the interests of shareholders and
other stakeholders.

Implementation of GCG principles:

Responsibility
The Companys Organs (General Meeting of Shareholders, Board of Commissioners and Board of
Directors) shall comply with the prevailing laws, regulations, Articles of Association and the Company
regulations, and perform their responsibilities towards the community and the environment, in order
to maintain business sustainability and gained recognition as good corporate citizen.

Independency
To further expedite the implementation of good corporate governance principles, the Company shall
be managed independently so that each companys organ does not dominate nor intervene one
another. Each organ shall not be influenced by certain partys interests, free from conflict of interest
and from any influence or pressure, so that any decisions will be made objectively.

Implementation of GCG principles:

Fairness and Equality

The Company shall take into consideration the interests of shareholders
and other stakeholders, based on the principles of fairness and equality.

GCG Implementation in 2013

The year of 2013 was the last stage of Good Garuda Citizen, in which
the Company strives to build itself as an ethically responsible company
by establishing good corporate governance culture. In 2013, Garuda
Indonesia started to use assessment results on GCG implementation
as one of the Key Performance Indicators (KPIs).

Evaluation and Achievement

In 2013, the Company achieved the following positive accomplishments:

Number of passengers grew by 22.3% to 25 million, and cargo grew by 23.4% to

345.923 ton.

Seat load factor reached 74.1% and aircraft utilization rate can be maintained at 10
hours 44 minutes.

Amidst the busy traffic of the airports especially Soekarno-Hatta, our On Time
Performance can be maintained at above 80%, namely 83.8%.

Operating Income grew by 7% to USD 3.72 billion compared to 2012 which stood at
USD 3.47 billion, and revenue from passenger grew by 10% to USD 2.96

The Model to Decide an International

Expansion
Service Domain Assessment
(Demand Side)

Step I:
Market
Attractiveness
Assessment

Step II:
Risk of Politic/
Security

Technological & Industry Characteristic

Assessment (Supply Side)
Step III:
Business
Initiation
Easiness
Assessment

Step IV:
Industry Attractiveness
(per specific industry)

Technological
& Industry
Characteristic
Assessment
(Supply Side)

Step V:
Country Rank
& Indentifi
cation of
KSF

Organizational &
Financial
Assessment
Step VI:
Specific
Internal
Competitive
ness
Assessment

Since Garuda Indonesia has big international market, we choose

New Zealand as our new target market.
https://
www.garuda-indonesia.com/id/en/destination/route-map/index-interna
tional.page

STEP I: Market Attractiveness Assessment

Population In Total (2013): 4.442 Million

GDP (2013): $185.8 Billion
GDP Growth:

STEP II
RISK OF POLITICAL AND SECURITY IN NEW
ZEALAND

Principles Security of New Zealand

The national security system should address all significant risks to New Zealanders and the nation, so
that people can live confidently and have opportunities to advance their way of life.
National security goals should be pursued in an accountable way, which meets the Governments
responsibility to protect New Zealand, its people, and its interests, while respecting civil liberties and
the rule of law.
The principle of subsidiarity should be applied to national security decisions, which means that the
responsibility and authority for decisions, and use of resources, ordinarily rests at the level of those
closest to the risk and best able to manage it.
New Zealand should strive to maintain independent control of its own security, while acknowledging
that it also benefits from norms of international law and state behaviour which are consistent with our
values, global and regional stability, and the support and goodwill of our partners and friends.

3 types of Stability and Security in New Zealand

Stable democracy
New Zealands political system is based on the British model and is stable. There is a
single house of Parliament, and the role of head of state is held by Queen Elizabeth II,
as Queen of New Zealand. Democratic engagement is strong. Typically between 7580% of New Zealanders turn out to vote in general elections.

Strong institutions
Our legal system is based on English law. The judicial system is independent and
robust. Private property rights are strongly protected, contracts are secure and
intellectual property rights are enforced.
The sound legal framework is supported by a free and independent media, ensuring
high levels of transparency in Government and corporate decision-making.

Economic underpinnings
A long term drive for diversification means that New Zealands economy, although still
powered mainly by agriculture, now also benefits from a flourishing manufacturing
sector, a thriving tourism industry, and a strong renewable energy resource base.

Energy security in international politics

Energy security is a highly politicised concept in recent times because of the twin challenges of
climate change and shifts in the global energy market. When an issue is politicised it is brought to
the forefront of political debate and prioritised in policyformation. In the report Energy Security in
Europe: proceedings from the Conference Energy Security in Europe, it states that since 2006, the
energy security and climate change nexus has been prioritised in political agendas across the world.
This is because climate change injects much uncertainty in regards to the future of the energy
system, and the nature of risks to this system. Alan DuPont argues that Climate change will
complicate energy choices and heighten anxieties about future supplies of energy, particularly oil, as
the transition from highly polluting fossil fuels to cleaner sources of energy gathers speed

Risk perceptions and energy security theory

in New Zealand
The politics of energy security is as such a debate on the nature and
level of risks to the energy system. Security, and risks to security, are in
part a question of perception,63 and the number of actors that can have
different views on energy security is broad. In the International Institute
for Strategic Studies (IISS) Transatlantic Dialogue on Climate Change
and Security, hosted in 2010, the language of threat was used by
participants in the debate to emphasise different risks to energy security
and climate change.

Conclusion
Securitisation Theory can examine the extent to which energy security
is political in New Zealand. In other words, Securitisation Theory can
examine how and why energy security has been framed in politics or as
something to be addressed by government.

SOCIO-CULTURAL INTERACTION

New Zealand regards Indonesias democratic transformation as one

of the great achievements of the last decade and fully supports the
sovereignty and territorial integrity of Indonesia. Given the two
countries common interests as democracies and neighbours in the
Asia Pacific region, New Zealand and Indonesia are natural partners
in the evolving regional architecture and well-positioned to work
together to meet 21st century challenges.

INVESTMENT PROCEDURE

In New Zealand has put a lot of effort to simplify the rules and taxes
also offering investors many other benefits that enhance the whole
experience of doing business

POTENTIAL OF M&A

Garuda Indonesia can make a codeshare agreement (aviation

business arrangement where two or more airlines share the same
flight) with Air New Zealand in order to open a new flights destination
to New Zealand

GOVERNMENTS SUPPORT

There is Republic of Indonesia embassy in Wellington, New Zealand

as well as New Zealand embassy in Jakarta. The New Zealand
Government is committed to further strengthening the good
relationship between Indonesia and New Zealand.

STEP IV
Industry Attractiveness
(per specific industry)

Competition
The competition within Airline Industry in New Zealand is not really tight.
There are only a handful number of airline company which specializes
in premium flights. For Example: Air New Zealand.
Just like Garuda Indonesia, Air New Zealand offers high quality flights
with reasonable price rather than flights with cheaper price but offers
normal quality. Even though, Air New Zealand is very popular in New
Zealand itself, so it is recommended to consider it as a tough competitor
and take careful actions when trying to enter the market

Access To Technology
Technology in New Zealand is quite advanced, even better than
Indonesia. Internet and other communication technologies have already
became a normal thing in New Zealand. People book flights through the
Internet, frequent use of online tickets and also online customer
services. So in this case, technology is not a problem

Access To End-User
As stated before, there are only a handful number of airline company
which specializes in premium flights. People in New Zealand may want
to try something new. So if Garuda is able to gain attention of customer
and might as well be able to spread brand awareness among the citizen
of New Zealand, Garuda Indonesia will stand a chance.

STEP V: Country Rank & Identification of KSF

Step VI
Specific Internal Competitiveness Assessment

Due Diligence

Due Diligence is a term used for a number of concepts involving

either the performance of an investigation of a business or person, or
of an act with a certain standard of care. It can be a legal obligation,
but the term willmore commonly apply to voluntary investigations,
some common.
Definition of due diligence for Blacks Law: the diligence reasonably
expected from, and ordinarily exercised by a person who seeks to
satisfy a legal requirement or to discharge on obligation.

Control System
Procedures designed and established to
check,record,regulate,supervise,authenticate, and (if
necessary) restrict, the access to an asset,resource or
system.

Recruitment System
Step #1 Determine your ideal recruiting target the goal of this step is to determine
precisely who recruiting efforts should target, including performance level, experience level, and
whether or not they are actively looking for a job.
Step #2 Understanding your targets decision criteria a significant part of any recruiting
process is attracting desired talent, which you cannot do effectively without understanding what
your targets consider important.
Step #3 Knowing where your target hangs out having defined your target and their
decision criteria, the next step aims at identifying where you are most likely to find the target
talent, including what communication channels would be effective for recruitment messages.
Step #4 Employment branding driving a pipeline of talent is the role of employment
branding, a science-driven discipline that produces a consistent flow of qualified talent interested
in some day working for your organization.
Step #5 Learning your targets job search process at this step you implement a process
designed to identify the typical process that your target audience uses once they begin a job
search. The goal is to better understand precisely how they look for jobs, so that you can
engineer your approach to advertising opportunities to make your jobs visible to them.

Step #6 Posting jobs for active candidates because active candidates are proactively
seeking out job openings, it doesnt take a lot to make your job postings visible.
Step #7 Directly sourcing non-active prospects because non-active prospects are
not in job search mode, they are unlikely to read any job postings or to visit your corporate
career site.
Step #8 Providing prospects with additional information at this step potential
candidates have decided to consider your firm but want additional information before they decide
to actually apply.
Step #9 The job application process by this step, potential candidates have been
convinced to apply for a position, so the goal is for a large percentage of the qualified individuals
who visit the site to complete the application process.
Step #10 Sorting applications by job once applications are received, the goal is to ensure
that the highest quality applications are sorted relevant to the most appropriate jobs (manually or
via software).
Step #11 The initial screening of applications and resumes at this step applications are
screened to see if they meet minimum qualifications for the job.

Step #12 The initial phone screen having screened resumes, the next step
involves screening the individual behind the application.
Step #13 Interviewing and selling qualified applicants in this step the
most qualified candidates advance to formal interviews and other assessment
activities.
Step #14 The final interview the goal of this step is to confirm your initial
desirability ranking and set expectations among those most likely to receive an
offer.
Step #15 The reference checking process with your short list vetted and
expectations for an offer set, the next step validates the perception of your
assessment team using references.

Step #16 The offer process the goal of this step is to put together an offer that is within
the companys boundaries and that meets as many of the candidates job acceptance criteria as
possible.
Step #17 The post-offer acceptance process once an offer is accepted, it doesnt
ensure the candidate will actually show up for work! The goal of this step is to ensure those that
accept our offers dont back out (as a result of a counteroffer or second thoughts).
Step #18 contrary to popular belief, the primary goal of onboarding is not to get employees
enrolled in benefits, but rather to provide resources and information that enable new hires to
become productive as fast as possible.
Step #19 Feedback and new hire monitoring if the ultimate goal is continuous
improvement of the recruiting process, then this step is the most important of all.

SOURCES

Garuda Indonesia Annual Report 2013

http://gosga.garuda-indonesia.com/web/public/aboutus/en
http://
inggitsoekarno.blogspot.com/2013/10/program-csr-company-social.h
tml

(cont.)

https://
www.garuda-indonesia.com/id/en/corporate-partners/index.page
https://
www.garuda-indonesia.com/id/en/destination/route-map/index-interna
tional.page

http://data.worldbank.org/country/new-zealand#cp_surv