Strategy of Competitiveness of Urea Industry in the International Market and Its Implication toward the Development of Urea Industry in Indonesia

Abstract

The aim of research is to find out and analyze the variable influencing the competitiveness and the strategy to increase the competitiveness and to formulate the competitiveness model of urea industry in the international market. The problems face by the urea industry are the gas raw material, the old plant, the old technology and the domestic selling price policy. The price policy (domestic price and export price) and the distribution policy (production volume and export volume) are significantly influencing the income and the profit of company and will be influencing toward the competitiveness. The insignificant domestic price influences the selling price (income) and the domestic policy of price regulation which is the same as the export price that will increase the income and the competitiveness. Research design is a case study, during the period Dec 2013 to June 2014 and analysis of the factors that influence the competitiveness by multiple linear regression, market structure analysis using the Herfindahl index and concentration ratio (CR4), Comparative advantage using the Revealed Comparative Advantage (RCA) and SWOT analysis, competitive advantage using Porter Diamond theory and to develop the strategy and model of competitiveness, it is used the Analytic Network Process (ANP). The analysis result of the Structure of Urea Market tends to the direction of Oligopoly with the moderate concentration level shown with the average value of Herfindahl Index of 0.0808 and the value of CR4 45.01 %. The Urea Industry of Indonesia has the comparative advantage is shown by the value of Revealed Comparative Advantage (RCA) of 2.07 which is higher than from China as the main competitor in Asia. The analysis result of competitive advantage of Porter’s Diamond Theory is that as a whole the attributes of resource and domestic demand have the competitive advantage. The support and government and the opportunity factor help the forming of competitive advantage. From the SWOT Matrix, the position of urea industry on Indonesia is in the quadrant II (Stability) having the opportunity and the big market strength. The strategy priority of the analysis of ANP is the development of technology, then the development of export market, the change of subsidy regulation and the strategy of the business communitcation with the other urea producer country.The research showed the need of revitalization of urea industry with the development of technology, market development and business communication with urea producer countries to increase competitiveness in the international market.

Keywords: Analytic Network Process (ANP), Comparative and Competitive Advantage, Competitiveness, Market structure, Porter’s Diamond, Price policy, RCA, SWOT


Article Review Status: Published

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