COUNTRY ANALYSIS

INDONESIA

DIPLOMA IN BUSINESS STUDY (BM111)

INTRODUCTION TO INTERNATIONAL BUSINESS (MGT361)

 DATE OF SUBMISSION:

5TH DECEMBER 2019

1) INTRODUCTION

Apple Inc. is an American multinational technology company headquartered in Cupertino,

California, that designs, develops, and sells consumer electronics, computer software,
and online services. It is considered one of the Big Four tech companies along
with Amazon, Google, and Facebook.

The company's hardware products include the iPhone smartphone, the iPad tablet

computer, the Mac personal computer, the iPod portable media player, the Apple
Watch smartwatch, the Apple TV digital media player, the AirPods wireless earbuds and
the HomePod smart speaker. Apple's software includes the macOS, iOS, iPadOS, watchOS,
and tvOS operating systems, the iTunes media player, the Safari web browser,
the Shazam acoustic fingerprint utility, and the iLife and iWork creativity and productivity
suites, as well as professional applications like Final Cut Pro, Logic Pro, and Xcode. Its
online services include the iTunes Store, the iOS App Store, Mac App Store, Apple
Music, Apple TV+, iMessage, and iCloud. Other services include Apple Store, Genius
Bar, AppleCare, Apple Pay, Apple Pay Cash, and Apple Card.

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to
develop and sell Wozniak's Apple I personal computer, though Wayne sold his share back
within 12 days. It was incorporated as Apple Computer, Inc., in January 1977, and sales of
its computers, including the Apple II, grew quickly. Within a few years, Jobs and Wozniak
had hired a staff of computer designers and had a production line. Apple went public in 1980
to instant financial success. Over the next few years, Apple shipped new computers
featuring innovative graphical user interfaces, such as the original Macintosh in 1984, and
Apple's marketing advertisements for its products received widespread critical acclaim.
However, the high price of its products and limited application library caused problems, as
did power struggles between executives. In 1985, Wozniak departed Apple amicably and
remained an honorary employee, while Jobs and others resigned to found NeXT.
As the market for personal computers expanded and evolved through the 1990s, Apple lost
market share to the lower-priced duopoly of Microsoft Windows on Intel PC clones. The
board recruited CEO Gil Amelio to what would be a 500-day charge for him to rehabilitate
the financially troubled company reshaping it with layoffs, executive restructuring, and
product focus. In 1997, he led Apple to buy NeXT, solving the desperately failed operating
system strategy and bringing Jobs back. Jobs pensively regained leadership status,
becoming CEO in 2000. Apple swiftly returned to profitability under the revitalizing Think
different campaign, as he rebuilt Apple's status by launching the iMac in 1998, opening the
retail chain of Apple Stores in 2001, and acquiring numerous companies to broaden the
software portfolio. In January 2007, Jobs renamed the company Apple Inc., reflecting its
shifted focus toward consumer electronics, and launched the iPhone to great critical acclaim
and financial success. In August 2011, Jobs resigned as CEO due to health complications,
and Tim Cook became the new CEO. Two months later, Jobs died, marking the end of an
era for the company. In June 2019, Jony Ive, Apple's CDO, left the company to start his own
firm, but stated he would work with Apple as its primary client.

Apple is well known for its size and revenues. Its worldwide annual revenue totalled
$265 billion for the 2018 fiscal year. Apple is the world's largest technology company by
revenue and one of the world's most valuable companies. It is also the world's third-largest
mobile phone manufacturer after Samsung and Huawei. In August 2018, Apple became the
first public U.S. company to be valued at over $1 trillion. The company employs 123,000 full-
time employees and maintains 504 retail stores in 24 countries as of 2018. It operates the
iTunes Store, which is the world's largest music retailer. As of January 2018, more than
1.3 billion Apple products are actively in use worldwide. The company also has a high level
of brand loyalty and is ranked as the world's most valuable brand. However, Apple receives
significant criticism regarding the labour practices of its contractors, its environmental
practices and unethical business practices, including anti-competitive behaviour, as well as
the origins of source materials.
Example of Apple Products:

Apple Watch
iPhone

Apple TV iPad

MacBook
2) Country analysis of country’s Indonesia:

a) Political Systems

Indonesia is the world’s third largest democracy, largest economy in south-east Asia, and
the only member of ASEAN in the G20. It is a role model for a successful political transition.
Indonesia is stable politically and has a Presidential system of democracy. A comprehensive
push for decentralisation has seen much power transferred to the regions.

The Indonesian political system is a republican republic, and the Indonesian Republic is a
federal state in which the authorities are concentrated in the hands of the central
government. The Republic of Indonesia was born in 1945 after a long period of Dutch
colonial rule and Japanese occupation during the Second World War. The Founding Fathers
established the form of a central government or a federal state to unify the Indonesian
people from a diverse ethnic, religious and cultural mix distributed to thousands of islands.

Indonesia continued to adopt the federal government model for five years after
independence until December 1949. It adopted the model of the United Republic of
Indonesia for seven months until August 1950 but returned to the model of a central unitary
state based on the 1945 Constitution. After the end of the new regime Indonesia (1966-
1998), political and governmental institutions underwent comprehensive reforms. Four
amendments to the 1945 Constitution were enacted in Indonesia in 1998-2000. Legislative,
judicial and legislative authorities were reorganized and Indonesian governments faced
pressure from the provinces to reduce centralization in which the provinces were given a
form of autonomy as a form of decentralization of power and the subsequent transformation
of the system into a republican, decentralized constitutional democratic system.

President Joko Widodo took up office on 20 October 2014. He is the first leader of Indonesia
to come from outside the political and military elite. The next Presidential election is due in
2019. Parliament is constituted by the House of Representatives and the Regional
Representational Council. The House of Representatives contains members from 10
different political groupings. The Regional Representational Council includes representatives
from each of Indonesia’s 34 provinces. Laws are passed by Parliament or by Presidential
decree. A Presidential decree must be confirmed by Parliament for it to take effect.

i. Executive Authority
The President is the head of the executive authority in Indonesia and according to the
Constitution, the President is the head of state and head of government and commander-in-
chief of the Indonesian armed forces and responsible for local administrations. The
President and Vice-President shall be elected by direct vote for a term of five years and shall
be governed for two consecutive terms, which was previously (before 2004) through the
Shura Council.

The prime minister is appointed and has wide powers to manage the country independently
in emergency situations.

ii. The Constitution

The Indonesian Constitution was first written in July 1945 and then suspended after it was
replaced by the Federal Constitution of 1949 and the Interim Constitution of 1950, and then
the Constitution of 1949 was reinstated in July 1959.

The Constitution regulates the relationship between the status of the State and the other
states, as well as determining the responsibilities, powers and functions of officials in the
State, as well as regulating relations between state institutions such as legislative and
executive.

iii. Judiciary

The Supreme Court is the highest judicial body whose judges are appointed by the President
of the Republic. The judiciary is composed of a different group of courts, which are
distinguished according to jurisdiction.
Most civil cases are adjudicated before national courts and appeals are heard before the
Supreme Court.
Other courts include:

 The Commercial Court examines bankruptcy and insolvency cases.

 The Administrative Court of the State and considers cases of administrative law
against the government.
 The Constitutional Court examines issues related to the legality of laws, general
elections, the dissolution of political parties and the scope of authority of state
institutions.
 Religious courts to deal with legal cases.
 b) Economics System

A change is actually something that a country is doing to develop the country to

compete internationally. Improvements are also being made to improve something that is not
yet ideal, such as improvements to Indonesia's economic system. Indonesia's economic
system is Pancasila's economy program. And the economic system, namely the UUD 1945,
could not contradict the nation's basis. Indonesia, together with a policy change from the
government, has also changed the economic system as much as many times.

The Minister of Industry said, after the establishment of similar centers in Brazil and
Italy, US tech giant Apple Inc. has set its sights on Indonesia as the site of its third largest IT
center in the world.  In terms of revenue, Apple is the world's largest IT company and the
world's largest technology company in terms of total assets. Therefore, if such a large
company wants to build one of its largest facilities in Indonesia, it would give some shine to
the investment environment in Indonesia. The minister added that the plan for Apple was in
line with the latest steps by the government in Industry 4.0 to boost the welfare of the
people.

The government has prepared the gradual digitalization of the manufacturing industry
under its Indonesia 4.0 road map. To achieve its goal, minister said the government needed
to promote initiatives that would improve creativity in the application of the latest
technologies. The resumption of iPhone sales in Indonesia is hailed not only as a boost for
customers, but as a landmark in the country's efforts to become the top tech investment
destination in Southeast Asia and a reminder of what governments can accomplish in
demanding "go local" firms.
 c) Demography

The population of Indonesia according to the 2010 national census was 237.64 million, and it
was estimated to reach 255.4 million in 2015. 58% live on the island of Java, the world's
most populous island.

Despite a fairly effective family planning program that has been in place since 1967, for the
decade ending in 2010, Indonesia's population growth was 1.49 percent. At that rate,
Indonesia's population is projected to surpass the present population of the United States.
Some say family planning should be revitalised based on the 1967 program to avoid
Indonesia becoming the world's third most populous country, but this aim has been criticized
by religious groups who believe that family planning goes against religious teachings.

Indonesia has a relatively young population compared to Western nations, though it is aging
as the country's birth rate has slowed and its life expectancy has increased. Indonesia's
median age was 30.2 years in 2017. Indonesia includes numerous ethnic, cultural and
linguistic groups, some of which are related to each other. Since independence, Indonesian
(a form of Malay and the official national language) is the language of most written
communication, education, government, and business. Many local ethnic languages are the
first language of most Indonesians and are still important.

Population
Indonesia has 271,900,251 of population. Indonesia is a sovereign archipelago in Southeast
Asia and the fourth most populous country on earth after China, India, and the United States.
49.7% of its population are females and 50.3% are males.

Area and Population Density

Indonesia is made up of more than 17,000 islands with over 1.9 million square miles of land,
which makes it the 4th largest country. Indonesia has a population estimated at 270.63
million in 2019, up from the 2015 estimate of 257 million. About 56.7% of Indonesia's
population lives on Java, the most populous island. The population density of Indonesia is
currently at 140.08 individuals kilometre per square.

Largest Cities in Indonesia

According to the 2010 official population data, Indonesia has 11 cities with a population over
1 million, although estimates from 2014 show that there are now 14 cities that have
populations that exceed 1 million. The 10 largest cities in Indonesia, with populations as of
2014, are:

o Jakarta (Jakarta Province): 10.135 million

o Surabaya (East Java): 2.843 million

o Bandung (West Java): 2.575 million

o Medan (North Sumatra): 2.497 million

o Bekasi(West Java): 2.51 million

o Semarang (Central Java): 2.067 million

o Tangerang (Banten): 2.001 million

o Depok (West Java): 1.869 million

o Palembang (South Sumatra): 1.561 million

o South Tangerang (Banten): 1.436 million

Jakarta isn't just the most populous city in Indonesia; it's also the most populous in
Southeast Asia and the 14th most populated city on earth. The official metropolitan area,
known as Jabodetabek, is the third largest in the world, and the metropolis's suburbs extend
even further. The entire area has a population of over 30 million, which makes it one of the
largest conurbations on earth. It's also one of the fastest-growing cities on earth, growing
faster than Beijing and Bangkok, with a population density in the city proper of 15,342 people
per square kilometer (39,740/square mile).

Demographic

Indonesia has more than 300 distinct ethnic and linguistic groups, although the largest and
most dominant in terms of politics are the Javanese at over 40% of the population. Most
Indonesians are descended from Austronesian-speaking people. Another major ethnic group
are Melanesians who live on the eastern part of the country. Other major ethnic groups
include: Sundanese (15.5%), Malay (2.27%), Madurese (3.03%), Batak (3.58%),
Minangkabau (2.73%), Betawi (2.88%), Bantenese (1.97%), Banjarese (1.74%), Balinese
(1.67%), and Makasserese (1.13%).

Chinese Indonesians account for about 3% of the population but they are influential,
controlling most of the country's wealth and commerce.

Religion, Economy and Politics

In addition to this diverse population, Indonesia is also the world's most populous
Muslim-majority country, as just over 87% of Indonesians declared Muslim on the 2010
census. 9.87% are Christian, 1.69% are Hindu, 0.72% are Buddhist and 0.56% practice
other faiths. The Indonesian constitution grants religious freedom although the government
only officially recognizes Islam, Protestantism, Roman Catholicism, Buddhism, Hinduism,
and Confucianism.

There are more than 700 languages spoken in Indonesia. Bahasa Indonesia, a form
of Malay, is the official language and is used mostly in education, media, commerce, and
administration. Most people in Indonesia actually tend to speak other languages as their
primary language, however.

The median age of the population in Indonesia is approximately 30.2 years of age,
42.4% of the population between 25 and 54 years of age. The 0-14 age group is currently
just over 25%, strengthening the number of youths that will come into the workforce as the
current workers move past working age.

In terms of accessibility to clean water and sanitation facilities, approximately 87.4% have
improved access to clean drinking water while 12.6% still struggle. Only 60.8% have
improved access to sanitation while 39.2% still have unimproved accessibility to sanitation
services. However, Indonesia maintains a fairly high literacy rate of 95.4% among the entire
population with males having a slight advantage of roughly 4% over females.

Population History

Another interesting statistic involves the ages of the Indonesian population and although
these figures date from the previous national census of 2000, they still tell an interesting
story. Of the total 2000 population, 27.3% were aged between 0 and 14 years, 66.5%
between 15 and 64, while just 6.1% of the population of Indonesia were aged over 65.

The birth rate was healthy compared to the death rate too and based on a 2012 estimate, it’s
believed that there are 17.76 births per 1,000 people compared to just 6.28 deaths. Add in a
loss of 1.08 people to net migration and you have a total annual growth rate of 1.04%.

Population Growth

That final figure of 1.04% may not seem like a lot but on a population of over 250 million, it
leads to some significant increases. As the Jakarta Post reported in 2013, Indonesia's
population has doubled within just 40 years from 119 million in 1971 to almost 240 million in
2010, based on figures from the Central Statistics Agency. In another 40 years, the country's
population is expected to climb much higher.

Population Projections

According to the Jakarta Post author, the high Muslim population in Indonesia is leading to a
very high birth rate, which cannot be sustained. The article points out that Jakarta,
Indonesia's largest city, is in a naturally flood-prone area, and the depth and extent of floods
only increases as the population density increases.

Unfortunately, Indonesia's attempts at family planning education and population control have
not been very successful, and it's hard to say how sustainable the country's growth will be.
Population by Broad Age Groups (2020)

d) Geography of Indonesia

Indonesia is the largest archipelago in the world. It consists of five major islands and
about 30 smaller groups. There are total number of 17,508 islands of which about 6000 are
inhabited. Straddling equator, the archipelago is on a crossroads between two oceans, the
Pacific and the Indian Ocean, and bridges two continents, Asia and Australia. Indonesia has
many high mountains, the highest of which are over 4000 meters. Many of them are active
volcanoes. There are tropical rainforests and jungles, as well as swampy mangrove areas.
Indonesia’s most fertile land is on the island of Java.
 Indonesia is a vast equatorial archipelago of 17,000 islands extending 5,150
kilometers east to west, between the Indian and Pacific Oceans in Southeast Asia. The
largest islands are Sumatra, Java, Kalimantan (Indonesian Borneo), Sulawesi, and the
Indonesian part of New Guinea known as Papua or Irian Jaya). Islands are mountainous
with dense rain forests, and some have active volcanoes. Most of the smaller islands belong
to larger groups, like the Moluccas (Spice Islands).

The territory of the Republic of Indonesia stretches from 6°08′ N latitude to 11°15′ S
latitude, and from 94°45′ E to 141°05′ E longitude. Total Area of Indonesia is 1,919,440 sq
km. The five main islands are Sumatra the most fertile and densely populated islands,
Java/Madura Kalimantan, which comprises two-thirds of the island of Borneo Sulawesi and
Irian Jaya which is part of the world’s second largest island, New Guinea. Indonesia’s other
islands are smaller in size.The country is predominantly mountainous with some 400
volcanoes, of which 100 are active. Two of the most violent volcanic eruptions in modern
times occurred in Indonesia in 1815 Mount Tambora in Sumbawa erupted killing 92,000 and
in 1883, Krakatau, erupted killing 36,000. While volcanic ashes resulted from eruption has
positive effects for the fertility of the surrounding soils, it also makes agricultural conditions
unpredictable in some areas. Indonesia has relatively high tectonic and volcanic activities. It
lies on the convergence between the Eurasian, Indo-Australian, Pacific, and Philippine Sea
Plate. The Sunda megathrust is a 5,500 km long fault located off southern coasts of
Sumatra, Java and Lesser Sunda Islands, where the Pacific Plate is thrusting northeastward
towards the subducting Sunda Plate. Tectonic movement in this fault is responsible for the
creation of the Sunda Trench, and mountain ranges across Sumatra, Java, and the Lesser
Sunda Islands.
3) Factors of cultural and economics geography

a) Shared Borders

This is important for companies when considering the transportation and distribution costs of
their products. These companies will benefit from lower physical distribution costs compared
to doing business with other parties far away from their own country. Countries with a
common boundary also have the benefit of enabling their businesses to better monitor their
foreign marketplaces.

Gusti Putu Suryawirawan, Director General of Electronics at the Industrial Department said
"Apple can now sell Smartphones in Indonesia because they're committed to investment
here". Apple plans to build three innovation centres in Indonesia over the next three years.
The first facility in Tangerang, on the outskirts of Jakarta, will start operating at the end of the
second quarter this year and will employ up to 400 staff, according to the ministry. The tech
giant’s re-entry into the Indonesian market is a key victory in Jakarta’s three-year battle to
encourage foreign firms to take a greater stake in developing its phone manufacturing
industry. By build this innovation centre apple can save the cost of transportation of
delivering those iPhones.

In the past, these efforts have been successfully mixed. "Made in Indonesia" was
established by the government in 2014. In their early version, the regulations concentrated
heavily on requiring companies to establish local production plants and left little room for
flexibility. This caught off guard many foreign sellers: China's Oneplus reacted when it left
the market in 2015, while Xiaomi disabled its Redmi Note 3 Pro phones by disabling 4-G
capacity. Since then, however, businesses have slowly adapted, since the government has
implemented more enforcement options, including investment.

b) Common Heritage

The culture of Indonesia has been shaped by long interaction between original
indigenous customs and multiple foreign influences. Indonesia is centrally-located along
ancient trading routes between the Far East, South Asia and the Middle East, resulting in
many cultural practices being strongly influenced by a multitude of religions, including Islam,
Hinduism, Buddhism, Confucianism, and Christianity, all strong in the major trading cities.
The result is a complex cultural mixture very different from the original indigenous cultures.

Examples of the fusion of Islam with Hinduism include Javanese Abangan belief, the
fusion of Hinduism, Buddhism and animism in Bodha, and the fusion of Hinduism and
animism in Kaharingan; others could be cited. Balinese dances have stories about ancient
Buddhist and Hindu kingdoms, while Islamic art forms and architecture are present in
Sumatra, especially in the Minangkabau and Aceh regions. Traditional art, music and sport
are combined in a martial art form called Pencak Silat.

The Western world has influenced Indonesia in science, technology and modern
entertainment such as television shows, film and music, as well as political system and
issues. India has notably influenced Indonesian songs and movies. A popular type of song is
the Indian-rhythmical dangdut, which is often mixed with Arab and Malay folk music.

Despite the influences of foreign culture, some remote Indonesian regions still
preserve uniquely indigenous culture. Indigenous ethnic groups Mentawai, Asmat, Dani,
Dayak, Toraja and many others are still practising their ethnic rituals, customs and wearing
traditional clothes.

Traditional performing arts

Music

Indonesia is home to with those from the islands of Java, Sumatra and Bali being
frequently recorded. The traditional music of central and East Java and Bali are gamelan
(traditional instruments including gambang, bonang, saron, petik, gong, dengung, and many
more).

On 29 June 1965, Koes Plus, a leading Indonesian pop group in the 1960s, 1970s
and 1980s, was imprisoned in Glodok, West Jakarta, for playing Western-style music. After
the resignation of President Sukarno, the law was rescinded, and in the 1970s the Glodok
prison was dismantled and replaced with a large shopping mall.

Kroncong is a musical genre that uses guitars and ukulele as the main musical
instruments. This genre had its roots in Portugal and was introduced by Portuguese traders
in the 15th century. There is a traditional Keroncong Tugu music group in North Jakarta and
other traditional Keroncong music groups in Maluku, with strong Portuguese influences. This
music genre was popular in the first half of the 20th century; a contemporary form of
Kroncong is called Pop Kroncong.

Angklung musical orchestra, native of West Java, received international recognition

as UNESCO has listed the traditional West Java musical instrument made from bamboo in
the list of intangible cultural heritage.

The soft Sasando music from the province of East Nusa Tenggara in West Timor is
completely different. Sasando uses an instrument made from a split leaf of the Lontar palm
(Borassus flabellifer), which bears some resemblance to a harp.

Dance

Indonesian dance reflects the diversity of culture from ethnic groups that composed
the nation of Indonesia. Austronesian roots and Melanesian tribal dance forms are visible,
and influences ranging from neighbouring Asian countries; such as India, China, and Middle
East to European western styles through colonisation. Each ethnic group has their own
distinct dances; makes total dances in Indonesia are more than 3000 Indonesian original
dances. However, the dances of Indonesia can be divided into three eras; the Prehistoric
Era, the Hindu/Buddhist Era and the Era of Islam, and into two genres; court dance and folk
dance.

There is a continuum in the traditional dances depicting episodes from the

Ramayana and Mahabharata from India, ranging through Thailand, all the way to Bali. There
is a marked difference, though, between the highly stylised dances of the courts of
Yogyakarta and Surakarta and their popular variations. While the court dances are promoted
and even performed internationally, the popular forms of dance art and drama must largely
be discovered locally.

During the last few years, Saman from Nanggroe Aceh Darussalam has become
rather popular and is often portrayed on TV. Reog Ponorogo is also a dance that originated
from the district Ponorogo, East Java, which is a visualisation of the legendary story
Wengker kingdom and the kingdom of Kediri.

A popular line dance called Poco-poco was originated in Indonesia and also popular
in Malaysia, but at early April 2011 Malaysian Islamic clerics banned the poco-poco dance
for Muslims due to them believing it is traditionally a Christian dance and that its steps make
the sign of the cross.

Drama & Theatre

The Wayang show, the Javanese, Sundanese, and Balinese shadow puppet theatre
shows display several mythological legends such as Ramayana, Mahabharata, and many
more. Wayang Orang is Javanese traditional dance drama based on wayang stories.
Various Balinese dance drama also can be included within traditional form of Indonesian
drama. Another form of local drama is Javanese Ludruk and Ketoprak, Sundanese
Sandiwara, and Betawi Lenong. All of these drama incorporated humor and jest, often
involving audiences in their performance.

The shadow puppets are mostly made of sheets of certain items. You can make
yours using wax paper and a sheet of translucent plastic, and download templates but those
people really do have talent to craft their own and one-of a kind shadow puppets, which are
carved one by one segment out of metal or other special materials.

Randai is a folk theatre tradition of the Minangkabau people of West Sumatra,

usually performed for traditional ceremonies and festivals. It incorporates music, singing,
dance, drama and the silat martial art, with performances often based on semi-historical
Minangkabau legends and love story.

Modern performing art also developed in Indonesia with their distinct style of drama.
Notable theatre, dance, and drama troupe such as Teater Koma are gaining popularity in
Indonesia as their drama often portray social and political satires of Indonesian society.
Martial arts

The art of Pencak Silat was created and firstly developed in the islands of Java and
Sumatra. It is an art for survival and practised throughout the Indonesian archipelago.
Centuries of tribal wars in Indonesian history had shaped silat as it was used by the ancient
warriors of Indonesia. Silat was used to determine the rank and position of warriors in old
Indonesian kingdoms.

Contacts with Indians and Chinese has further enriched silat. Silat reached areas
beyond Indonesia mainly through diaspora of Indonesian people. People from various
regions like Aceh, Minangkabau, Riau, Bugis, Makassar, Java, Banjar, etc. moved into and
settled in Malay Peninsula and other islands. They brought silat and passed it down to their
descendants. The Indonesian of half-Dutch descent are also credited as the first to have
brought the art into Europe.

Silat was used by Indonesian independence fighters during their struggle against the
Dutch colonial rule. Unfortunately, after Indonesia achieving their independence, silat
became less popular among Indonesian youth compare to foreign martial arts like Karate
and Taekwondo. This probably because silat was not taught openly and only passed down
among blood relatives, the other reason is the lack of media portrayal of the art.

Efforts have been made to introduce and reintroduce the beauty of silat to Indonesian
youth and the world. Exhibitions and promotions by individuals as well as state-sponsored
groups helped the growing of silat's popularity, particularly in Europe and United States.
Indonesian 2009 Silat movie Merantau is one of Indonesian efforts to introduce silat to
international scene.

Another martial art from Indonesia is Tarung Derajat. It is a modern combat system
created by Haji Ahmad Drajat based on his experience as a street fighter. Tarung Drajat has
been acknowledge as a national sport by KONI in 1998 and is now used by Indonesian Army
as part of their basic training.

Traditional visual arts

Painting
 What Indonesian painting before the 19th century are mostly restricted to the
decorative arts, considered to be a religious and spiritual activity, comparable to the pre-
1400 European art. Artists' names are anonymous, since the individual human creator was
seen as far less important than their creation to honour the deities or spirits. Some examples
are the Kenyah decorative art, based on endemic natural motifs such as ferns and hornbills,
found decorating the walls of Kenyah long houses. Other notable traditional art is the
geometric Toraja wood carvings. Balinese paintings are initially the narrative images to
depict scenes of Balinese legends and religious scripts. The classical Balinese paintings are
often decorating the lontar manuscripts and also the ceilings of temples pavilion.

Under the influence of the Dutch colonial power, a trend toward Western-style
painting emerged in the 19th century. In the Netherlands, the term "Indonesian Painting" is
applied to the paintings produced by Dutch or other foreign artists who lived and worked in
the former Netherlands-Indies. The most famous indigenous 19th century Indonesian painter
is Raden Saleh (1807–1877), the first indigenous artist to study in Europe. His art is heavily
influenced by Romanticism. In the 1920s Walter Spies settled in Bali, he is often credited
with attracting the attention of Western cultural figures to Balinese culture and art. His works
has somehow influenced Balinese artists and painters. Today Bali has one of the most vivid
and richest painting traditions in Indonesia.

The 1920s to 1940s were a time of growing nationalism in Indonesia. The previous
period of romanticism movement was not seen as a purely Indonesian movement and did
not develop. Painters began to see the natural world for inspiration. Some examples of
Indonesian painter during this period are the Balinese Ida Bagus Made and the realist
Basuki Abdullah. The Indonesian Painters Association (Persatuan Ahli-Ahli Gambar
Indonesia or PERSAGI, 1938–1942) was formed during this period. PERSAGI established a
contemporary art philosophy that saw art works as reflections of the artist’s individual or
personal view as well as an expression of national cultural thoughts.

From the 1940s on, artists started to mix Western techniques with Southeast Asian
imagery and content. Painters that rooted in the revolutionary movement of the World War
and the post-World War period started to appear during this period, such as Sudjojono,
Affandi, and Hendra.

During the 1960s, new elements were added when abstract expressionism and
Islamic art began to be absorbed by the art community. Also during this period, group of
painters that are more concerned about the reality of Indonesian society began to appear,
taking inspiration from the social problem such as division between the rich and the poor,
pollution, and deforestation. The national identity of Indonesia was stressed by these
painters through the use of a realistic, documentary style. During the Sukarno period this
socially-engaged art was officially promoted, but after 1965 it lost popularity due to its
presumed communist tendencies.

Three art academies offer extensive formal training in visual art: Bandung Institute of
Technology founded in 1947; the Akademi Seni Rupa Indonesia (Indonesian Fine Arts
Academy) or ASRI, now known as ISI, in Yogyakarta was inaugurated in 1950; and the
Institut Kesenian Jakarta (Jakarta Arts Institute) or IKJ, was opened in 1970.

Sculpture

Indonesia has a long history of stone, bronze and Iron Ages arts. The megalithic
sculptures can be found in numerous archaeological sites in Sumatra, Java to Sulawesi. The
native Indonesians tribes have their own distinct tribal sculpture styles, usually created to
depict ancestors, deities and animals. The pre-Hindu-Buddhist and pre-Islamic sculptures
can be traced in the artworks of indigenous Indonesian tribes. The most notable sculptures
are those of Asmat wooden sculpture of Papua, the Dayak wooden mask and sculpture, the
ancestral wooden statue of Toraja, also the totem-like sculpture of Batak and Nias tribe.

The stone sculpture artform particularly flourished in 8th-to-10th-century Java and

Bali, which demonstrate the influences of Hindu-Buddhist culture, both as stand-alone works
of art and also incorporated into temples. Most notable sculpture of classical Hindu-Buddhist
era of Indonesia are the hundreds of meters of relief and hundreds of stone buddhas at the
temple of Borobudur in central Java. Approximately two miles of exquisite relief sculpture tell
the story of the life of Buddha and illustrate his teachings. The temple was originally home to
504 statues of the seated Buddha. This site, as with others in central Java, show a clear
Indian influence. The examples of notable Indonesian Hindu-Buddhist sculptures are; the
statues of Hindu deities; Shiva, Vishnu, Brahma, Durga, Ganesha and Agastya enthroned in
rooms of Prambanan temples, the Vishnu mounting Garuda statue of king Airlangga, the
exquisite statue of Eastern Javanese Prajnaparamita and 3.7 meters tall Dvarapala dated
from Singhasari period, and also the grand statue of Bhairava Adityawarman discovered in
Sumatra. Today, the Hindu-Buddhist style stone sculptures are reproduced in villages in
Muntilan near Borobudur also in Trowulan the former capital site of Majapahit in East Java,
and Bali, and sold as garden or pool ornament statues for homes, offices and hotels.

Today in Indonesia, the richest, most elaborate and vivid wooden sculpture and wood
carving traditions can be found in Bali and Jepara, Central Java. Balinese handicrafts such
as sculptures, masks, and other carving artworks are popular souvenir for tourist that has
visited Indonesia. On the other hand, the Jepara wood carving are famous for its elaborately
carved wooden furnitures, folding screens also pelaminan gebyok (wedding throne with
carved background).

Architecture

Rumah Gadang of the Minangkabau

For centuries, the Indonesian vernacular architecture has shaped settlements in

Indonesia which commonly took form of timber structures built on stilts dominated by large
roof. The most dominant foreign influences on Indonesian architecture were Indian, although
European influences have been particularly strong since the 19th century and modern
architecture in Indonesia is international in scope.

As in much of South East Asia, traditional vernacular architecture in Indonesia are

built on stilts, with the significant exceptions of Java and Bali. Notable stilt houses are those
of the Dayak people in Borneo, the Rumah Gadang of the Minangkabau people in western
Sumatra, the Rumah Bolon of the Batak people in northern Sumatra, and the Tongkonan of
the Toraja people in Sulawesi. Oversized saddle roofs with large eaves, such as the homes
of the Batak and the tongkonan of Toraja, are often bigger than the house they shelter. The
fronts of Torajan houses are frequently decorated with buffalo horns, stacked one above
another, as an indication of status. The outside walls also frequently feature decorative
reliefs.

The 8th-century Borobudur temple near Yogyakarta is the largest Buddhist temple in
the world, and is notable for incorporating about 2,672 relief panels and 504 Buddha statues
into its structure, telling the story of the life of the Buddha. As the visitor ascends through the
eight levels of the temple, the story unfolds, the final three levels simply containing stupas
and statues of the Buddha. The building is said to incorporate a map of the Buddhist cosmos
and is a masterful fusion of the didactic narrative relief, spiritual symbolism, monumental
design and the serene meditative environs. The whole monument itself resembles a giant
stupa, but seen from above it forms a mandala.

The nearby 9th-century temple complex at Prambanan contains some of the best
preserved examples of Hindu temple architecture in Java. The temple complex comprises
eight main shrines, surrounded by 224 smaller shrines. The Indian influence on the site is
clear, not only in the style of the monument, but also in the reliefs featuring scenes from the
Ramayana which adorn the outer walls of the main temples, and in the votive statuary found
within.

Crafts

Minangkabau songket

Indonesia is considered as home of world handicraft. Every ethnic group has its own
uniqueness, style, and philosophy of crafting. Most of them are made from wooden, bone,
fabric, stone, and paper. These natural materials were crafted using hands into profitable
and aesthetic items. Handicraft manufacturing serves not only as an important economic
sector, but also a tradition and has a social function as well. The handicraft industry employs
thousands of people in towns and villages across the country. About half a billion dollar
worth of handicraft is exported every year, and many more is consumed domestically.

There are many varieties of handicraft from other regions. West Sumatra and South
Sumatra are particularly noted for their songket cloths. Villages in the Lesser Sunda Islands
produce ikat while provinces in Kalimantan are long known for their basketry and weaving
using rattan and other natural fabrics. Wood art produced by the Asmat people of Papua is
highly valued. Cities along Java's northern coast, Cirebon, Pekalongan, and Rembang are
known as centres of batik. Cirebon and Jepara are important cities in furniture, producing
rattan and carved wood respectively, while Tasikmalaya is known for embroidery. Pasuruan
also produces furniture and other products and support stores and galleries in Bali. Bandung
and Surabaya, both modern, cosmopolitan, and industrialised cities—much like Jakarta but
on a lesser scale—are creative cities with a variety of innovative startups.

Several Indonesian islands are famous for their batik, ikat and songket cloth. Once
on the brink of disappearing, batik and later ikat, found a new lease on life when former
President Suharto promoted wearing batik shirts on official occasions. In addition to the
traditional patterns with their special meanings, used for particular occasions, batik designs
have become creative and diverse over the last few years.

Other noted Indonesian crafts are Jepara wood carving and Kris. In 2005, UNESCO
recognised Kris as one of Masterpiece of the Oral and Intangible Heritage of Humanity from
Indonesia.

Literature

Pramoedya Ananta Toer was Indonesia's most internationally celebrated author,

having won the Magsaysay Award as well as being considered for the Nobel Prize in
Literature. Other important figures include the late Chairil Anwar, a poet and member of the
"Generation 45" group of authors who were active in the Indonesian independence
movement. Tight information controls during Suharto's presidency suppressed new writing,
especially because of its ability to agitate for social reform.

In the book Max Havelaar, Dutch author Multatuli criticised the Dutch treatment of the
Indonesians, which gained him international attention.

Modern Indonesian authors include Seno Gumira Adjidarma, Andrea Hirata,

Habiburrahman El Shirazy, Ayu Utami, Gus tf Sakai, Eka Kurniawan, Ratih Kumala, Dee,
Oka Rusmini. Some of their works have translated to other languages.

Poetry

There is a long tradition in Indonesia, particularly among ethnically Malay

populations, of extemporary, interactive, oral composition of poetry. These poems are
referred to as pantun. Contemporary Indonesian poets include among others, Sutardji
Calzoum Bachri, Rendra, Taufiq Ismail, Afrizal Malna, Binhad Nurrohmat, Joko Pinurbo,
Sapardi Djoko Damono.
Recreation and sports

Many traditional games are still preserved and popular in Indonesia, although
western culture has influenced some parts of them. Among three hundred officially
recognised Indonesian cultures, there are many kinds of traditional games: cockfighting in
Bali, annual bull races in Madura, and stone jumping in Nias. Stone jumping involves leaping
over a stone wall about up to 1.5 m high and was originally used to train warriors. Pencak
Silat is another popular form of sport, which was influenced by Asian culture as a whole.
Another form of national sport is sepak takraw. The rules are similar to volleyball: to keep the
rattan ball in the air with the players' feet.

Popular modern sports in Indonesia played at the international level include football
(soccer), badminton and basketball. Badminton is one of Indonesia's most successful sports.
Indonesian badminton athletes have played in Indonesia Open Badminton Championship,
All England Open Badminton Championships, and many international events, including the
Summer Olympics and won Olympic gold medals since badminton was made an Olympic
sport in 1992. Rudy Hartono is a legendary Indonesian badminton player, who won All
England titles seven times in a row (1968 through 1974). Indonesian teams have won the
Thomas Cup (men's world team championship) thirteen of the twenty-two times that it has
been contested since they entered the series in 1957. In the internationally popular sport of
football (soccer), Indonesian teams have been active in the Asian Football Confederation
(AFC).

Sporting events in Indonesia are organised by the Indonesian National Sport

Committee (KONI). The Committee, along with the government of Indonesia, have set a
National Sports Day on every 9 September with "Sports for All" as the motto. Indonesia has
hosted the Southeast Asian Games four times, in 1979, 1987, 1997 and 2011, and won
overall champion title in each of these years. As of 2011, Indonesia has won champion titles
10 times overall out of 18 SEA Games it has attended since debuted in 1977. The country
also hosted the 1993 Asian Basketball Championship.

Foods

The cuisine of Indonesia has been influenced by Chinese culture and Indian culture,
as well as by Western culture. However, in return, Indonesian cuisine has also contributed to
the cuisines of neighbouring countries, notably Malaysia and Singapore, where Padang or
Minangkabau cuisine from West Sumatra is very popular. Also Satay (Sate in Indonesian),
which originated from Java, Madura, and Sumatra, has gained popularity as a street vendor
food from Singapore to Thailand. In the 15th century, both the Portuguese and Arab traders
arrived in Indonesia with the intention of trading for pepper and other spices. During the
colonial era, immigrants from many countries arrived in Indonesia and brought different
cultures as well as cuisines.

Most native Indonesians eat rice as the main dish, with a wide range of vegetables
and meat as side dishes. However, in some parts of the country, such as Irian Jaya and
Ambon, the majority of the people eat sago (a type of tapioca) and sweet potato.

In some places people eat Pempek, a type of indonesian traditional dish (refer to
pempek;website), and also Rendang (refer to picture on top-left of this topic {FOODS}.

The most important aspect of modern Indonesian cuisine is that food must be halal,
conforming to Islamic food laws. Haraam, the opposite of halal, includes pork and alcohol.
However, in some regions where there is a significant non-Muslim population, non-halal
foods are also commonly served.

Indonesian dishes are usually spicy, using a wide range of chili peppers and spices.
The most popular dishes include nasi goreng (fried rice), Satay, Nasi Padang (a dish of
Minangkabau) and soy-based dishes, such as tofu and tempe. A unique characteristic of
some Indonesian food is the application of spicy peanut sauce in their dishes, as a dressing
for Gado-gado or Karedok (Indonesian style salad), or for seasoning grilled chicken satay.
Another unique aspect of Indonesian cuisine is using terasi or belacan, a pungent shrimp
paste in dishes of sambal oelek (hot pungent chili sauce). The sprinkling of fried shallots also
gives a unique crisp texture to some Indonesian dishes.

Chinese and Indian cultures have influenced the serving of food and the types of
spices used. It is very common to find Chinese food in Indonesia such as Dim Sum and
noodles, and Indian cuisine such as Tandoori chicken. In addition, Western culture has
significantly contributed to the extensive range of dishes. However, the dishes have been
transformed to suit Indonesian tastes. For example, steaks are usually served with rice.
Popular fast foods such as Kentucky Fried Chicken are served with rice instead of bread and
sambal (spicy sauce) instead of ketchup. Some Indonesian foods have been adopted by the
Dutch, like Indonesian rice table or 'rijsttafel'.

Popular media

Cinema
 The largest chain of cinemas in Indonesia is 21Cineplex, which has cinemas spread
throughout twenty-four cities on the major islands of Indonesia. Many smaller independent
cinemas also exist.

In the 1980s, the film industry in Indonesia was at its peak, and dominated the
cinemas in Indonesia with movies that have retained a high reputation, such as Catatan Si
Boy and Blok M and actors like Onky Alexander, Meriam Bellina, Nike Ardilla and Paramitha
Rusady. The film Tjoet Nja' Dhien (1988) winning 9 Citra Awards at the 1988 Indonesian
Film Festival. It was also the first Indonesian movie chosen for screening at the Cannes Film
Festival, where it was awarded Best International Film in 1989. However, the film industry
failed to continue its successes in the 1990s, when the number of movies produced
decreased significantly, from 115 movies in 1990 to just 37 in 1993. As a result, most movies
produced in the 1990s contained adult themes. In addition, mov to dominate Indonesian
cinema. The industry started to recover in the late 1990s, with the rise of independent
directors and many new movies produced, such as Garin Nugroho's Cinta dalam Sepotong
Roti, Riri Riza and Mira Lesmana's Petualangan Sherina and Arisan! by Nia Dinata. Another
form of recovery is the re-establishment of the Indonesian Film Festival (FFI), inactive for
twelve years, and the creation of the Jakarta International Film Festival. Daun di Atas Bantal
(1998) received Asia Pacific Film Festival in Taipei.

Television

Radio

The state radio network Radio Republik Indonesia (RRI) was founded in 1945. It consists of
a network of regional stations located in all thirty-three provinces of the archipelago. In most
cities and large towns there are also many commercial stations. Since 2006, several digital
radio stations have been based in Jakarta and Surabaya, using Digital Audio Broadcasting
(DAB) and Hybrid HD-Radio

c) Ownership of Natural Resources

Company of IPhone have prefer to get wide into the Indonesia because of the
ownership of natural resources which there is high demand for them. The country was the
only South East Asian member of OPEC until 2008 and continues to be a major liquid
natural gas (LNG) exporter. In energy and mining, Indonesia is the world’s leading thermal
coal exporter, the largest tin exporter and home to vast deposits of precious metals such as
gold, silver and copper. Its unique topography yields highly sought-after attributes. For
example, its coal offers low Sulphur content and high calorific value while its deposits of both
coal and other minerals are found close to the earth’s surface thus maintaining competitive
extraction costs. Located on the Asia Pacific ‘Ring of Fire’ with over 40% of the world’s
proven geothermal energy reserves. Indonesia has access to huge renewable energy
sources to meet its domestic needs.

Such natural resources make the country unique among other emerging markets in
providing long term energy and food security for its burgeoning population. The challenge
that now exists is that of effective and sustainable management. Long an exporter of primary
products, Indonesia has been riding the global commodity boom while failing to take
advantage of value-added processes to boost revenues. The country is tightening its grip
over its natural resources by securing domestic needs over that of exports and in some
cases banning the export of primary resources. While controversial, this is presenting
opportunities for investors to bring technical knowledge and expertise as the country seeks
to move up the value-added chain. Prospects for investment are to be found in areas such
as petrochemical refinement, smelting plants for metal mining and other downstream
processes in energy and agricultural commodities.

In terms of future outlook, Indonesia is entering a ‘sweet spot’ as a convergence of its

young, working population with that of relatively stable inflation and sustained economic
growth is fuelling consumer spending. There is much to be said for Indonesia’s
demographics as a key component of its future growth potential. Over 50% of the population
is below the age of 30, is highly adaptive to new technology and has a low dependency ratio
among its workforce giving rise to a so called ‘transitional demographic dividend’. This is in
marked contrast to countries such as China where an ageing population and a high
dependency ratio due to the one child policy is taking its toll. For Indonesia, this optimal
environment is projected to continue for another decade to 2020, according to the World
Bank, after which the population will begin to age faster and modern lifestyles reduce the
birth rate.
 To fully reap the benefits of this transitional period, Indonesia must avoid the ‘middle
income trap’ of failing to transcend its income level to become a fully developed nation. As
witnessed in countries such as South Korea, investment in higher education, research and
innovation to create a skilled workforce that produce high technology goods is the way to do
this. On paper at least, this is the direction that Indonesia is headed according to the
Economic Masterplan to 2030 that would see a transition to a knowledge-based economy.
However, realizing this goal will be dependent on realization of private sector and foreign
direct investment. This represents a pivotal stage as investors have an opportunity to come
into the market during exciting and unfettered growth to thus play a role in this transition. So
that is the main reason of ownership that IPhone have widened their company into
Indonesia.

4) Entry Modes choose to penetrate the market of Indonesia:

A mode of entry into an international market “is the channel which organisation that want to
operate in international markets employ to gain entry to a new international market. The
choice for a particular entry mode is a critical determinant in the successful running of a
foreign operation or business”.

An international market entry mode is to create the possibility by arranging company’s

products, technology, human skills, management or other resources to enter into a foreign
country. Entry modes also help companies to determine goals, resources and policy in order
to channel their international activities toward a sustainable international expansion.

4.1) Entry Mode Factors:

Dunning’s eclectic theory can help decide which mode of entry to use in penetrating a
foreign market. Three factors are being considered, which are ownership, location and
internalization advantages.

4.1.1) Ownership Advantages

Ownership advantages are resources owned by a firm that grant it a competitive advantage
over its industry’s rivals.

Apple Corp. manufactures and markets a variety of computers and consumer electronics
products, including smartphones, tablets and music players. The investment analyst firm
Market Realist identified brand strength, innovation, supply chain management and premium
pricing strategy as key factors in the company’s competitive advantage:

 Brand Strength
Apple was the world’s leading brand in 2017, ahead of Google, Coca-Cola and IBM,
according to annual rankings published by brand consultancy firm Interbrand. Brand strength
gives companies like Apple great visibility in the marketplace and helps build consumer
loyalty. The company’s strong branding, and the interrelationships between its products,
encourage customers who buy one Apple product to try another. Products such as the
iPhone, iPad and Mac share the same software and applications, and operate in a similar
way, making Apple a natural choice when customers are considering another device.

 Innovative Products
Apple has a long-established reputation for innovation and a commitment to developing new
products. The company developed the graphical user interface, first used in its own
computers, and, more recently, pioneered the iPod music player and introduced new levels
of performance for smartphones. A key competitive advantage for the company is its ability
to develop innovative products that share the same operating system, software and
applications. This minimizes the risk, timescale and costs of product development, enabling
the company to introduce a stream of new products and stay ahead of competitors. Apple’s
innovative strategy of developing products that complement each other strengthens
customer loyalty and helps build a barrier to competition.

 Strong Integrated Supply Chain

An ecosystem of suppliers, developers and business partners provides Apple with a strong
competitive advantage. The company owns chip manufacturers, controls manufacturing,
follows extremely strict software standards and operates its own stores. Deals with leading
music and entertainment companies provide a vast source of media for all the company’s
products. It also has a community of more than 6 million independent software developers
creating applications for Apple products. This gives Apple control over the entire process of
product development, manufacturing and marketing which create an advantage that
competitors find difficult to match.

 Premium Pricing Strategy

Apple sets premium prices for its products and minimizes discounts to wholesalers to keep
prices consistent across the market. The company aims to offer customers a high-quality
product with unique features and uses high prices to reinforce the perception of added value
and maintain profitability. The high-pricing strategy also sets a benchmark for competitors,
which must offer equivalent features to match Apple’s perceived value without losing money.

4.1.2) Location Advantages

The desirable and demands on Apple’s product had been high and the company are trying
to take part in Southeast Asia’s largest economy which is at host country like Indonesia. The
resumption of iPhone sales in Indonesia is being lauded as a boon or beneficial not only for
consumers but as a milestone in the country’s efforts to become Southeast Asia’s top tech
investment destination and a demonstration of what governments can achieve in demanding
firms “go local”.

By this, Apple offcially resumed iPhone sales across major cities in the country and having
won over Indonesian authorities with a commitment to building a US$44 million research and
development (R&D) facility in Southeast Asia’s largest economy. That is also enough to
meet “local content” regulations. Apple is able to sell smartphones and other electronic
devices in Indonesia because it has committed to invest in the country.

I will also give an advantage to Apple to build an expansion which may generate positive
return to both sides, Apple’s and Indonesia.

4.1.3) Internationalization Advantages

 Currently, most Apple stores are in the Americas, but they plan to open more global
stores in the near future. For example, Apple’s focusing on China for the most global
expansion.
 Going global is a wise step for Apple because they can utilize their economies or
scale and of scope to succeed in foreign markets. Apple’s products are already
considered world models as it is usable by many different cultures.
 They use a global strategy, which meant by they are having high consistency in their
products and low responsiveness to local needs.
  They take advantage of many different global outlets like outsourcing, importing,
exporting, foreign licensing and foreign direct investment.
 Their suppliers are from Europe, the Americas, but mostly from Asia.
 Apple is constantly updating their products in well developed markets, so going
global allows them to sell outdated models (leftover inventory) in less developed
markets.

4.2) Chosen of Entry Modes: LICENSING

When a firm is going to explore a foreign market, the choice of the best mode of entry will
arise in the firm’s expansion strategy. Licensing has its own advantage for the company to
implement the mode of entry.

Licensing: Involves a licensee and licensor tied together by a certain agreement which
stands to benefit both sides. The licensor will well its know-how to the licensee, usually for a
period of time. The know-how refers to intangible properties such as patens, inventions,
formulas, processes, designs, copyrights and trademarks. The licensee needs to pay the
royalty fee in order to have the agreement with the licensor.

Licensing is a primary stage for a firm which plans to enter a foreign market. Due to the
uncertainty of the foreign market, the political or economic situation, this instability will
arouse the firm to consider developing a licensee agreement. This agreement can help the
firm to make their expansion in a steadier way. In this manner, the licensor firm can collect
royalty fee from licensee which a bring benefit for a licensor.

4.2.1) Apple Inc. & Foxconn

Apple Inc. (licensor) can implement licensing as another international activity which may help
the company to avoid any risk from foreign country as well as to performs all the
international laws and regulation of Indonesia to work in ethical manners. In order to
penetrate the market of Indonesia and at the same time, to expand its business.

The company did strengthen its relationship with Foxconn (licensee), a Taiwanese
multinational electronics contract manufacturing company with its headquarters in Tucheng,
New Taipei, Taiwan. Foxconn, the company, which is known for producing iPhones for the
US-technology giant, Apple, wants to combine hardware and software in its integrated
solutions, such as cloud computing.

Apple is aggressively working to expand its presence in Southeast Asia. The company has
been working with Foxconn on the efforts which further strengthening the partnership
between the two parties. Specifically, by having licensing with Foxconn, Apple is expected to
begin constructing new research and development (R&D) centres which is said to be located
in Indonesia. For what it’s worth, Foxconn currently has a presence in Indonesia, working
with local vendor Luna as well as Huawei in the country.

The company was planning research and development centres in Indonesia. Likewise,
Reuters reported earlier this month that Apple was investing $44 million over three years in
an R&D centre in Indonesia. In a nutshell, Apple will be able to sell smartphones and other
electronic devices in Indonesia as it has committed to invest in the country.

There has been speculation that Apple’s establishment of a centre is a quid pro quo for a
license allowing the company to sell LTE products in Indonesia. In order to establish a retail
store in Indonesia, companies must have some sort of manufacturing or research facilities
there as well.

Apple is further deepening its ties with Foxconn for its Shenzhen and Indonesian expansion.
A strong relationship with Foxconn means Apple will have the capability of expanding
throughout the world at a faster pace. By having an agreement with Foxconn, Apple Inc. will
receive much advantage which lead to the expansion of business activities of the company
especially to be able to penetrate the market of Indonesia.

4.2.2) Pros & Cons of licensing towards Apple Inc.:

Advantages Disadvantages
1. Low Risk - risk is minimum as 1. Limits market opportunities for
compared to other market entry both the licensee and the licensor
modes. as they are being tied with
 Low financial risk - provided agreement.
licensor to fully investigate its
market opportunities and the 2. Licensing agreements must be
 abilities of its licensee. worded carefully to minimize
problems and misunderstanding
2. Low regulations - complications and also guard against creating a
related to regulations are also future competitor.
less faced by the firm.
3. Risk of losing the know-how
3. High Returns – Returns are high asset to competitors
for the firm as licensor receive
royalty fee from licensee.

4. Permits companies to investigate

foreign sales potential without
making significant investment in
financial and managerial
resources.

5) The factors that help company success in international trade

Harvard Business School, Professor Michael Porter’s theory of national competitive

advantage is the newest addition to international trade theory. Porter believes that success
in international trade comes from the interaction of four factors and firms’ specific elements.
 1.1 Factor Endowments/Conditions
A country’s endowment of factors of production affects its ability to compete
internationally. But Porter goes beyond the basic factors- land, labour and capital and
he added up more advanced factors such as educational level of the workforce and
the quality of the country’s infrastructure. Apple Inc. is very confidential about the
process of its development, but some things are known. Apple Inc. is very different
from other companies involved in electronics. Apple Inc. is also very serious about
what others, like the feeling of unboxing one of their items, do not find as significant.
The company spends a significant amount of time before and after their launch
testing each of their products.

i. Land
Apple computers land factor production involves any issues affecting the natural
resources available to Apple's Asian suppliers, including the cost and availability of
raw materials such as multi-touch screen glass, casing plastic, and chipset silicon.
Land production factors include plastic, glass, arsenic, high-grade aluminium and
high-grade polycarbonate (1% of Apple's greenhouse emissions are recycled)

ii. Labor
The labour pool that led to Apple's realization includes internal, state-run employees
working on its development, prototyping, and subsequent marketing and sales
activities, as well as international workers working in Asian foreign factories. Apple
 reduces its production costs for Apple computers and other products by using
external labour for manufacturing. Apple's labour force considerations include many
people responsible for various jobs such as Mac Hardware Engineering,
Applications, Marketing, Accounting, Human Resources, Services, Finance, Software
Engineering, iPhone Engineering, Advertising, Data, Systems & Technology,
AppleCare, Retail Engineering.

iii. Capital
Like many technology-based first-world companies, Apple avoids full vertical
integration to outsource physical production to reduce costs. This dichotomy is
mirrored in the packaging for the iPod Touch and other Apple products, which often
carry the slogan "Designed in California" alongside the government-mandated,
country-of-origin "Made in China" claim. For example, iPod components: hard drive,
LCD, RAM, microprocessor circuit board, battery pack, audio chip and video screen.

iv. Entrepreneur
With Steve Jobs at its helm, Apple has made an international name for itself as a
leader in the category of entrepreneurship. In its product line and its efforts to
mythologize its own brand, Apple emphasized innovation. Steve Jobs himself is
Apple's entrepreneurship.

1.2 Demand Conditions

In meeting their domestic customer’s needs, however, firms continually
develop and fine-tune products that also can be marketed internationally. Thus,
pioneering firms can stay ahead of their international competitors as well. For
example, Japanese consumers electronics producers benefit internationally because
of the willingness of Japan’s large, well-off middle class to buy the latest electronics
creations of Sony, Toshiba and Matsushita. After being fine-tuned in the domestic
market new models of Japanese digital cameras are sold to European and US
consumers.
Suppliers from Apple Inc. are planning in the second half of 2019 to
manufacture components for up to 75 million new iPhones, roughly the same number
as a year ago, according to people familiar with the issue.
Despite US-China trade tensions and a decline in the overall smartphone
market, the volumes planned for the next iPhone launch cycle would signal a steady
demand for the company's most important product. In the holiday quarter last year,
the technology giant headquartered in Cupertino, California, stopped reporting
iPhone shipment numbers as unit growth turned negative and started providing
statistics to illustrate the growth of products such as Apple Music. Analysts estimate
that in the second half of last year, Apple shipped 70 million to 80 million new
iPhones.
Asian suppliers from the company are preparing to crank components for
three new iPhone models to meet the demand for the holiday season, people said,
asking not to be identified citing internal estimates. One of the people said that
Apple's Asian partners could ramp up to 80 million new phones if needed. Key
iPhone assembler Foxconn Technology Group has stepped up recruiting in
Shenzhen and is offering employees about 10 times over a year ago to secure a
peak-period workforce, said another person familiar with the issue.
Since September 2012, Apple has announced new iPhones each and the new
models usually go on sale in that month's final weeks. The company reported
earnings in the third quarter on July 30, and the company's guidance could indicate
its iPhone sales expectations at the end of the fourth quarter ending in September.
Apple also releases iPhone revenue figures, with the company generating last
holiday quarter $52 billion from iPhones, a 15 percent decrease, and last quarter $37
billion from new iPhones, a 27 percent increase. Nevertheless, these figures include
a mix of new iterations as well as earlier versions of the iPhone over the past few
years.

Jeff Pu at GF Securities predicts that shipments of newly released iPhones will

increase to 74 million in the second half, up approximately 7% from last year's
estimate of 69 million, while TF International analyst Ming-Chi Kuo expects that
Apple will sell 75 million to 80 million new iPhones in the second half of 2018. The
volumes of this year can reflect stabilization after a year of volatility, although this is a
far cry from the double-digit growth numbers of past years.
 Naturally, the fact that Apple suppliers are planning to produce parts for 75
million new iPhones does not necessarily mean that many will be sold by the
company. After launch, Apple will evaluate sales and may not reach that mark for the
total shipments. Commenting the company declined.

1.3 Related and Supporting Industries

The emergence of an industry often stimulates the development of local
supplier eager to meet industry’s production, marketing, and distribution needs. An
industry located close to its supplies will enjoy better communication and the
exchange cost saving ideas and invention with those suppliers. For example,
Hollywood dominance of the world film industry is based in part on the local
availability of specialists input suppliers such as casting directors, stunt coordinators
etc.
By having a firm for instance in the United States in the industry of
semiconductors brings a technological advantage to the firm in the industry of
personal computers and other technically advanced products. Rather than the
personal computer firms having to develop their own technology, they can use that
which was developed or used by the industry of semiconductors. For example, Apple
Inc. headquarters is located in Cupertino, California, meaning the company is close
to the distributor. This is going to enjoy better communication.

Apple Park, corporate headquarters of Apple Inc

 1.4 Firm Strategy, Structure and Rivalry
The domestic environment in which firms compete shapes their ability to compete in
international markets. To survive, firms facing vigorous competition domestically must
continuously strive to reduce cost, boost product quality, raise productivity and develop
innovative products. Firms should have systematized their strategy in order to compete
internationally.

i. Firm Strategy
Apple Inc.’s generic strategy is broad differentiation. This generic strategy
focuses on key features that differentiate the company and its information technology
products from competitors. Through the broad differentiation generic strategy, Apple
stands out in the market. For example, elegant design and user-friendliness of products,
combined with high-end branding, effectively differentiate the technology business.
This generic strategy means that Apple Inc. always aims to set itself apart from
competitors not by price but by competitive advantages based on product design that
attracts customers. Such design includes seamless connectivity among devices and
cutting-edge aesthetics. Even though this generic strategy makes Apple Inc. different, the
company still broadly reaches various segments of the market. The firm’s products are
designed for everyone, thereby supporting a broad market reach. For example, Apple
targets individuals and business organizations through the MacBook product line. In this
way, the generic strategy of broad differentiation supports the company in maintaining its
competitive advantage, leadership, and position as a high-end and high-value technology
business.
The broad differentiation generic strategy has significant implications on Apple’s
Inc. strategic objectives. For example, to apply this strategy, the company must continue
emphasizing innovation through research and development. Apple Inc. must keep
developing innovative products so that the business maintains its competitive advantage.
Competitors eventually catch up with new technologies and new products, so the broad
differentiation generic strategy compels the company to continuously innovate to keep
itself always ahead of the competition. Thus, continuous innovation is one of Apple’s Inc.
strategic objectives based on the broad differentiation generic competitive strategy. In
addition, to maintain business growth, the company must keep growing its market reach,
such as in the global consumer electronics market. In its generic strategy for competitive
advantage, Apple Inc. does not focus on any specific market segment. Instead, the
company competes by selling various goods and services that suit the various segments
of the consumer electronics and information technology services industries. Thus,
 another of Apple’s Inc. strategic objectives based on its generic strategy is to penetrate
markets to ensure a broad reach. Such expansion and business growth are achieved
through intensive strategies for growth.
Other than that, strengthen the ecosystem of Apple Inc. Apple's Inc. business
strategy can be described as vertical integration in such a way that at the same time the
company has advanced software, hardware and services expertise. The vertical
integration of Apple Inc. is one of the main factors that separates it from the competition.
The company has benefited tremendously from its vertical integration. Specifically,
Apple's Inc. ecosystem, which is enabled by such integration, is an important source of
competitive advantage. Easily synchronize Apple Inc. devices and software and work well
with each other. Applications work simultaneously on multiple Apple Inc. devices and
there is no significant difference in user interfaces; however, the same items do not match
other company products, creating a closed ecosystem's likes. The ecosystem of Apple
Inc. creates the costs of switching its customers to the competition. The ecosystem also
offers ways to exploit partnerships and sell additional products and services to existing
customers.
Last but not least , is decreasing dependence of the business on the sales of
iPhones. Apple's Inc. business strategy is moving from relying on sales from iPhone to
prioritizing its services business and other divisions. John Giannandrea was promoted to
a job in machine learning and AI role, retail manager Angela Ahrendts left the company
recently and Bill Stasior was replaced as Siri's face. These high-profile changes that took
place within the less than three-month time frame is a clear indication of the company's
focus on services and other business divisions in order to reduce the company's
dependence on iPhone sales. It is important to note that positive results are expressed in
these and other initiatives. Specifically, in the first fiscal quarter of 2019, Apple's services
business unit reported record revenues of USD 10.9 billion, which is a 19 percent year-
on-year increase.

ii. Firm Structure

Apple Inc. organizational structure can be described as hierarchical. Such a structure
has been developed by its founder and former CEO late Steve Jobs in order to ensure
focused realization of his innovative ideas and clear vision for the business. Apple Inc.
organizational structure has been subjected to certain modifications since the leadership
role was assumed by Tim Cook on August 2011. Specifically, Mr. Cook embraced the
decentralization of decision making to a certain extent in order to encourage innovation
and creativity at various levels. Nevertheless, the structure remains to be largely
hierarchical.

Currently, Apple Inc. organizational structure has the format illustrated in figure below:

Example of Apple Inc. Organizational Structure

Hierarchical organizational structure. Although Tim Cook introduced considerable

changes to Apple corporate structure since assuming the top job in 2011, the structure
still remains to be highly hierarchical with many layers of management. Massive size of
the company that comprises 132,000 full-time equivalent employees globally necessitates
the adherence to the hierarchical organisational structure.

Advantages of Apple hierarchical organizational structure include tight control

possessed by senior management over all aspects of the business. Moreover, promotion
opportunities motivate employees to perform well and there are clear levels of authority
and responsibility. On the negative side, Apple’s hierarchical organisational structure may
compromise flexibly of the business to reflect changes in the global marketplace.
 Furthermore, in hierarchical organizations communication across different departments
tends to be less effective than in flat organizations.

Product-based grouping. Product-based grouping is an important feature of Apple

organizational structure. The multinational technology company divides its operations into
the following product-based groups:

1. This group includes App Store, ApplePay, iCloud, and Apple Music.
2. iPhone
3. iPad
4. Other products. These include Apple TV, iWatch, headphones, cases, displays, storage
devices and various other connectivity and computing products and supplies
 

Collaboration between different groups and divisions. Apple Inc. maintains an

intensive and effective collaboration between various groups and divisions of the
company. Each product within Apple portfolio such as iPad, iPhone, iPad, Apple TV and
iWatchis a result of collaboration of product-based groups.

Apple Inc. Board of Directors consists of eight members with a solid leadership
background in a range of industries. Three members are acting CEOs and two members
are former Chairman and CEOs of global companies.  Moreover, proven leaders such as
former US Vice President Albert Gore Jr., former CFO and Corporate President the
Boeing Company James A. Bell and co-founder and Director of BlackRock Susan
Wagner also serve in Apple Board of Directors.

Taking into a number of challenges faced by the company such as rapidly decreasing life
cycle of technology products and declining sales of iPhones, iPads and Mac products, it
can be argued that Apple organizational structure may be subjected to certain changes in
the medium-term perspective. To be more specific, elements of matrix organizational
structure and divisional organizational structure may be integrated into Apple Inc.
organizational structure to a greater extent to increase the efficiency of new product
development practices.

iii. Firm Rivalry

 Example of Samsung Logo

Samsung was a major tech corporation for a long time. It's an internet meme that
Samsung steals all the ideas from Apple, reproduces them, and sells them for less than
Apple sells the original product. I'm sure Samsung would deny that claim, but we know for
sure that Apple's smartphone industry is a strong competitor. Samsung is also involved in
shipbuilding and financial services sectors, but Apple's main concern is its hardware
development. At a lower standard price, Samsung manufactures tablets and televisions than
Ipad and Apple TVs. Our electronics prefer to run Google licensed Android operating
systems. Many of the largest apple rivals are working together to reduce the market share of
Apple.
The move to split OLED display orders between Samsung and LG seems to have
arisen from the growing rivalry between Apple and Samsung. Samsung is the producer of
every OLED display found in every iPhone model currently available in the market, which
means it makes a profit every time Apple Inc. sells an iPhone to a customer. What’s more,
the Korean tech company’s technology receives the praise for making an Apple device look
good.
This, of course, is not good for Apple Inc. as Samsung is its biggest rival in the
smartphone market to date.
There is also more rivalry between Apple Inc. and its rivals. On the flip side, Apple
Inc. can take advantage of the rivalry between Samsung and LG in order to lower the prices
of their OLED displays. According to a 2018 report from Korean news site ETNews, LG’s
entry into Apple’s supply chain brings a fresh challenge to Samsung, which was formerly
Apple’s sole supplier of OLED displays.
Apple Inc. originally selected LG to be its secondary OLED display supplier sometime
last year. By having two suppliers in direct competition with each other, not only will Apple
Inc. be able to lower the costs of producing iPhones, it will also have access to innovations
both companies might have.
6) Conclusion

In conclusion, Apple Inc. is an American multinational technology company headquartered

in Cupertino, California, that designs, develops, and sells consumer electronics, computer
software, and online services. It is considered one of the Big Four tech companies along
with Amazon, Google, and Facebook. Apple also was the world’s leading brand in 2017,
ahead of Google, Coca-Cola and IBM which means the company has a brand strength that
gives companies like Apple great visibility in the marketplace and helps build consumer
loyalty.

There are also several advantage of Apple which make the company able to compete with
other brand in the market. The differentiation and licensing strategies used by Apple to
penetrate many country’s market will lead the company to be able to penetrate Indonesia
marketplace.

Indonesia is a democracy and republican republic country which means the authorities are
concentrated in the hands of the central government. President has the authorities to make
decision which need to be fair to the Indonesian. The political, economic, demography and
geography of Indonesia will slightly affect the plan of Apple to run their business in the
country.

Apple must have their manufacture or research facilities in the Indonesia country in order to
build their own retail store in the host country which for Indonesia, there are few regulations
and rules to build facilities there. However, the use of licensing entry modes with Foxconn
will help the company to penetrate Indonesia market. At the same time, to analyse a few
factors that also may affect the company to run their business in host country like Indonesia

It can be inferred that Apple Inc follows effective international strategies, market entry modes
and perform effective international activities in overseas markets. It is also evident that
strategic options chose by firms operating at international level differ from country to country
due to environmental factors. Firms are also needed to select entry modes by considering
their advantages and disadvantages. So, firms should consider the impact of environmental
factors, while formulating international strategies for their business.