Application for Music Entertainment Needs in Indonesia

Introduction

According to an analysis by PWC (2017), it is without a doubt that the consumer market is growing rather rapidly in the emerging markets such as Indonesia. However, as many entrepreneurs have taken the risk to invest in businesses close to all the new businesses collapse before achieving profitability. Coming up with a business idea might be easy, but the ability to run a successful business is a challenging operation. Planning for the development of the business carefully is essential.

Entertainment is a venture that will never become outdated, and its success depends on developing strategic business plans. I have always been interested in running a business based on the potential of such investments. Over, the past few years an observation that has intensified my interest is the constant growth of the entertainment industry which is driven by technological advancement and globalization. Despite the challenges in the industry, I believe that the venture is feasible and gainful. After an assessment of the market in Indonesia, I have realized that the market is expanding gradually and the consumers are friendly to the industry that is dominated by a few well-established firms. The entertainment sector is very competitive and extensively diverse since the consumer markets keeps on expanding. Thus, this business plan will provide an in-depth analysis of both primary and secondary research that is carried out to examine the external and internal business environments, introduce strategies for running the business competitively and assumptions that will determine the viability of the venture and align some recommendations that will guide the operations for competitiveness and sustainable expansion in years to come.

Research – Business viability and Opportunities

Entrepreneurship mainly entails the ability to develop, identify and respond to market opportunities. Potential business ventures can be established in markets that are emerging with less exploitation. Such markets provides sustainability and competitiveness for the business that is strategically situated in the market. Thus the micro and macro market must be examined through thorough analysis to establish the suitability of the business and its ability to generate the required revenue.

Macro market Analysis

Within the macro environment of the industry, the assessment was carried out through a second study that sought to examine the state of Indonesia and Jakarta City while investigating on the market influencers through the use of PEST analysis Model. Also, this sought to establish the practicality on the level in which business operators are impacted by government based regulation, exchange rates changes, and technology advancement. Primary data was acquired through questionnaires and interviews that sought to generate maximum data within a short span.

Indonesia

With its population accounting to approximately 261 million persons, Indonesia is ranked fourth globally regarding its population composition (BBC, 2018 p.1). Even though the country is very diverse, it is mainly dominated by Muslims. The market is one that is characterized by a significant growth that has been increasing over the last years. Despite being an emerging market, Indonesia remains to be very authoritative regarding economic growth that is further boosted by the diverse businesses (BBC, 2018 p.1). The information is well illustrated by the figure below.

Source: BBC (2018)

Jakarta is both the most significant and capital city of Indonesia that is densely populated with a populace of over 9.6 million. The city is famous for its healthy population and fascinating nightlife that suits the needs of the populace. Its nominal GDP accounted for 483.8 billion dollars in 2016 which represents about 17.5 percent of the country’s revenue (Salna and Tassia, 2018 p.1). In this context, the city was graded as the 67th most influential city regarding its financial generations as a whole. This, therefore, illustrates a positive perception of the city’s potential in the next year. However, an assessment conducted in the last year demonstrates a slow growth speed that includes a consumer index drop of 0.8 percent to 3.2 while the unemployment level has decreased to 5.6 percent (Salna and Tassia, 2018 p.1). The demographics of the city is suitable given that it offers a diverse a competitive business landscape.

PEST Analysis

Indonesia has a high population, and some of the leading cities are Sumatra and Jakarta. The main language is Indonesia with most people being Muslims. This section provides a PEST analysis.

Political Forces

The political state of the nation is a democratic one where the president and his deputy are elected via the country’s parliament. The country holds favorable trade regulations that are believed to be contributing highly to the rising investments. The political state in the country is stable as it mainly encourages togetherness and fairness. Unlike most of the developing states that tend to set high tariffs to discourage foreign investment, the country is one that supports development. However, domestic firms are charged less which thus justifies the domination of domestic companies across different industries. Politically, the country relates well with the established and growing nations which facilitates trade development. The high population, however, is likely to lead to more unemployment levels from 5.6 percent in the coming years in the case that the country can no longer sustain the growth level.

Economic Forces

Indonesia as a developing nation under a stable democratic government has been involved in the implementation of different measures to boost its GDP. The government only consumes about 23.5 percent of its revenue and reserves the rest for development activities in the exportation of natural gas and crude oil the country is the 8th leader globally (Salna and Tassia, 2018 p.1). In the last three years, the country has achieved notable development accounting to the GDP increase up to 6.1 percent.  The servicing industry generates about 37.5 percent of the nation’s GDP a sum that is very favorable (Salna and Tassia, 2018 p.1). The government has concentrated uniquely in FDI which demonstrates growth consistency and the authority of the economic market.

With the growth of the GDP, the retailing and servicing industry, in general, has benefited regarding expansion. With the economic growth, individuals earning has increased as well which means that their spending habit is rather utmost. It is estimated that the sector will experience a five percent increase in the next year if the state continues to be the same. The per capita growth increase between 2016 and 2017 is likely to lead to increased purchasing authority.

Social Forces

Indonesia has a vast and diverse populace which is rising with an account of about 1 percent. The lives of individuals are average. Most individuals mainly reside in major cities to secure employment.

Low illiteracy level

The government has invested much in education with an appealing literacy rate of 90.4 percent. The nation utilizes 3.6 percent of the revenue to support education. In this context, with more educated individuals this is likely to affect the performance of the entertainment sector as individuals tend to focus on more productive spending. In that, the individuals are well informed about the adverse consequences of entertainment on their fiscal spending’s which might discourage their spending.

High per Capita Income

With the stability of the economy it means that the public is earning more and thus, their earning is more essential about disposable capital. The individuals will spend more on entertainment due to the low consciousness of spending. It is worth noting that those that earn less are very sensitive when it comes to spending.

Rising Public Advertisement That Encourages Investment

The government wishes to increase the presence of the nation on the global scale through trade. Thus several initiatives that provide funding to individuals have been set up to encourage local and global investments. In this context, there is a likelihood that the entertainment industry will become highly competitive due to the entrance of more players. However, this is also an advantage to the business given that it will be operating in a favorable environment where the regulation supports government based growth (Wonsono, 2018 p.1). The growth of public awareness will also foster operation requirements. In that, the business must seek to differentiate its products to gain competitiveness over the others. The differentiation should not be profit oriented but should seek to meet the needs of the consumer to achieve loyalty from them. Consumers are increasingly demanding for quality and affordable services regardless of the industry an aspect that every entrepreneur should take into account.

Technological Forces

Technology is a crucial aspect of the contemporary entertainment industry.  Technology can affect the kind and the quality of the provided entertainment and develops an extensively rapid speed surrounding that necessitates creative approaches to maintain the engagement of the consumers for them to stick around while attracting others.

Innovation Is a Vital Trend in the Entertainment Industry

Digital media is all about innovation (Wonsono, 2018 p.1). One has to be very creative in the differentiation of products. In that due to the increasing ranges of events in the contemporary society, the consumers are demanding a somewhat differentiated set of media products. When it comes to music, it should be presented innovatively. In that, it should not only be the latest but well organized as part of the entertainment.

Macro Industry Analysis

The servicing industry is the most significant economic contributor across the globe. However, in Indonesia, it is the third after manufacturing and agriculture. Its contribution is significant. The entertainment is the most dominant with a value of about 3 percent of the general contributions. Without a doubt, the consistent growth within the sector is very foreseeable in the Indonesia market.

Online Entertainment

The entertainment industry represents one of the largest and rapidly growing sectors in the Indonesian economy (Dahrul, 2018). The sector has been driven mainly by the economic development and increasing earnings in the nation which is a necessary level towards change. Also, the sector will acquire further development in the coming years. Online entertainment is one of the sectors that is growing slightly rapidly courtesy of technology advancement and globalization. Individuals can access a media from their comfort at ease than ever before. The online share is significant but has not been explored fully in Indonesia since the market is not very crowded. It is evident that the market has much potential which can be explored through a strategic focus as a whole.

Porter’s Five Forces

The threat of New Entry

The music industry both within the online and physical grounds has always retained a moderate entrants threats due to cost challenges. However, the norm is rapidly changing due to internet and information technology growth which offers more opportunities. In that, the online operations require less operating funds. The substitute for entertainment is online as well as

Supplier Power

Suppliers bargaining authority is high particularly in the production and entertainment sector when equated to other areas. The music industry is very populated mainly by the well-established operators who make the operation even tougher. Due to the customized settings of the sector favorite players are classified as the services suppliers while simultaneously acting as the human resource. Most of the leading operators are the ones that own accepted brands thus unveiling their excellent bargain power (Wonsono, 2018 p.1). Thus, the company needs to understand the entertainment culture in the Indonesian society.

Buyer Power

Buyer’s bargaining authority is intense since the switching cost is zero for those that are involved. Buyer’s bargaining authority is additionally driven by the immense nature of offers in the industry.

Threat of Substitutes

There are a wide variety of entertainment music mainly gaming, online platforms, and cinemas and so on (Amirio, 2016 p.1). The increasing adoption of social networking as a source of entertainment is an additional substitute given that individuals tend to rely on these sources. Thus, for the company to be able to gain more from the market, it should capitalize on differentiation to overcome substitution threat.

Competitive Rivalry

Competition within the global setting is high, and the leading firms in the sectors are well established regarding market share, profitability, and dominance. The market is not only saturated by small and large players, but there is a varying number of substitutes which further reduces the market forcing the operators to adopt strategies that enable them to overcome the challenges.    

Results Analysis

From the above analysis of both the micro and macro markets for the entertainment industry in Indonesia, it is evident that the market is highly competitive although it has some significant potentials. The buyers have an immense bargaining authority given that the switching cost is zero and thus most of the players, therefore, rely on strategies such as cost leadership to sustain the consumers. Thus it is evident that the market is full of challenges which should be mitigated for high gain and sustainability in the market.

Recommendations

Based on the state of the market, it is thus recommended that the business should venture into the Indonesia market using customized products and goods. Also, the use of cost leadership would be the most beneficial because it generally leads to increased ability to attract more consumers while retaining the existing ones (Sarahtika, 2018). The approaches are essential in mitigating the competition while ensuring that the entertainment provided is suitable for cultural needs and consumer’s preferences. The business will be established as a unique and quality focused enterprise.

Conclusion

In summing up, it is apparent that the entertainment industry is characterized by rapid growth which is mainly fueled by technology innovation and globalization. The industry is a potential one for the business given that it will offer unending opportunities for the business with the ability to offer diverse products and services. The macro environment shows that the industry provides possible opportunities for expansion in general that will require the business to be strategically situated in the market respectively.

 

 

 

 

 

 

 

 

 

 

 

References

Amirio, Dylan, 2016. Indonesia’s cinema industry next big scene. The Jakarta Post. Retrieved From: http://www.thejakartapost.com/news/2016/05/26/indonesias-cinema-industry-next-big-scene.html

BBC, 2018. Indonesia country profile. Retrieved From: https://www.bbc.com/news/world-asia-pacific-14921238

Dahrul, Fathiya, 2018. Jokowi, Seeking to Reshape Indonesia’s Economy, Eyes Film and Fashion. Bloomberg. Retrieved From: https://www.bloomberg.com/news/articles/2018-04-04/movies-in-spotlight-as-jokowi-seeks-to-reshape-indonesia-economy

PWC, 2017. Global Entertainment and Media Outlook: 2017 – 2021. Indonesia Data Insights. Pp. 1-2.

Salna, Karlis and Sipahutar, Tassia, 2018. Indonesia's Economy Improves Slightly as Exports Pick Up. Bloomberg. Retrieved From: https://www.bloomberg.com/news/articles/2018-02-05/indonesia-s-economy-grows-faster-than-estimated-in-4th-quarter

Sarahtika, Dhania, 2018. Film Communities: Shining Light of Indonesia's Film Industry. Jakarta Globe. Retrieved from: http://jakartaglobe.id/movies/film-communities-shining-light-indonesias-film-industry/

Wonsono, Anthony, 2018. Creating the Future of Entertainment. Globe Asia. Retrieved From: http://www.globeasia.com/cover-story/creating-future-entertainment/