IN3N – ORGANIZATION DEVELOPMENT
AND CHANGE MANAGEMENT
Guiding Coalition and Anchoring Culture Through Acquisition
(2009 02 2986)
(2009 02 3000)
(2009 02 3005)
This paper consists of three parts; organization background, analysis of key success factor, and recommendation. We capture briefly the situation when acquisition happened. Judging from fact that acquisition was succeeded – reaching it goals – we identified that was two key success factors. Guiding by Kotter’s Model we focused on building guiding coalition and anchoring new culture. As our objectives, we recommend some action to Sampoerna’s new CEO which can improve change management in the organization after acquisition.
II. ORGANIZATION BACKGROUND
PT. Hanjaya Mandala Sampoerna (Sampoerna) is the biggest cigarette manufacture in Indonesia. In 2008, it can sell almost 73.3 billion unit cigarette, valued up to 33.9 trillion rupiahs. These stats are the highest among other competitors in the cigarette industry. With terrific product brand like Dji Sam Soe, A Mild, Sampoerna Hijau Kretek, etc, this company became an icon of cigarette industry in Indonesia.
Sampoerna’s story of success is inseparable from the history of its founding family. Sampoerna traces its origin to Liem Seeng Tee, a Chinese immigrant who founded the Company in 1913. At his home in Surabaya, Indonesia, he began producing and selling hand-rolled kretek cigarettes, named after the crackling sound they make as they burn. His small company was among the first to manufacture and market kretek as well as non-clove cigarettes on a commercial basis. Kretek cigarettes quickly grew in popularity. By the early 1930’s, Liem Seeng Tee had changed his family name and the name of his company to Sampoerna (Indonesian term for ‘perfect’).
However, by 1959, three years after the passing of Seeng Tee, and in the aftermath of Indonesia’s struggle for independence, Sampoerna was once more on the verge of closure. In that year, Aga Sampoerna (Seeng Tee’s second son) was appointed to lead the company, and succeeded in reestablishing and rebuilding the company. Aga’s second son, Putera took over the helm of PT. HM Sampoerna in 1978. During Putera Sampoerna’s tenure, the company established itself as a public company with a modern corporate structure, and embarked on a period of investment and expansions. During the process, Sampoerna consolidated its position as one of Indonesia’s top-tier companies.
Sampoerna’s vision is embodied in the “Three Hands philosophy”. The philosophy embodies the business environment and Sampoerna’s role in this context. The Hands, which represent adult smokers, employees and business partners, and society at large, are the three key stakeholders the Company must embrace to reach its goal of becoming the most respected company in Indonesia. They address each group through: (1) delivering high quality cigarettes with fair value to adult smokers, (2) providing good compensation and working conditions to employees and building a good relationship with business partners, and (3) giving back to the society at large.
There are 225 large (28%) and 585 medium (72%) tobacco related industries in 2004 (Central Board of Statistic, 2004). From those companies, only three players leading the market with 68% market share [Exhibit 1]. In 2004, Sampoerna took second position with 19.91% market share compared to Gudang Garam 30.25% and Djarum in third position with 18,26% (GAPPRI in Agnes, 2009). These three players are competing directly to become a market leader in industry. Sampoerna is well known as an innovative company with creative marketing strategy. We can see it from it phenomenal product called A Mild, the first low nicotine cigarette in Indonesia.
May 18, 2005, Philip Morris International (PMI) acquired...
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