Case Studies

The case discusses the story of the IOI Group, one of the largest palm oil players in Malaysia that has seen rapid growth in the past two decades. Controlled by the Lee family since 1982, the IOI Group's main businesses initially were property and palm plantations. As a relative latecomer in the palm oil industry, it grew both organically and through acquisitions, and it currently has sales of about US$4.3 billion and employs 30,000 people. Over the years, the IOI Group moved away from producing crude palm oil (CPO), a key commodity, and pursued a strategy of vertical integration by moving into downstream activities such as food ingredients manufacturing and oleochemicals. This transformed IOI from a Malaysian plantation company to a global ingredients manufacturer, making it a good example of a so-called "emerging market multinational." The case takes the point of view of Dato' Lee, the second-generation family leader who is currently in charge of the downstream businesses, and discusses three challenges he faces in IOI's transformation process: 1) optimizing and integrating the global value chain; 2) determining the most suitable way to coordinate a multinational company with substantial global sales and operations; and 3) adaptation to changing needs of global customers. All this is supported by extensive information on the changing dynamics in the palm oil industry, where emerging market players are moving up the value chain and snapping up manufacturing assets from global fast-moving consumer goods companies like Unilever, while the latter increasingly focus on branded goods and seek to exit the lower margin and capital-intensive manufacturing of ingredients. Students are asked to analyze the changing industry dynamics and provide recommendations to executive director Dato' Lee given the goal to make IOI a leading palm oil player.

The Ciputra Group was set up by Mr. Ciputra in the 1980s, after a long entrepreneurial career with a vision to provide a business for his children. The case describes the development of this group, which evolved into a prominent and innovative player in the Indonesian property sector. Under Mr. Ciputra's guidance, the company became known for its satellite cities, in which the group combined technical, construction, and urban planning qualities, along with the ability to understand and manoeuvre in the difficult Indonesian environment. This model was later exported to other emerging markets. The case ends with the company facing two sets of interlinked problems. One set is strategic, as the company's business model has proven to be vulnerable, and it is undergoing various changes. The question is what strategic option the company should choose. The second set of issues concerns the leadership and corporate structure of the group. Since Mr. Ciputra is in his late 70s, a generational change in leadership is imminent, and students are asked to reflect on the most appropriate path towards further development of the business from one led by a charismatic entrepreneur towards a professional family business. The two sets of issues are interlinked with each other and pose opportunities and constraints.

The case narrates the story of the Rodamas Group, owned by the ethnic Chinese Tan family in Indonesia. The company started as a trading firm in 1951 and over time became a joint venture partner in manufacturing businesses with a range of mainly Japanese partners after Indonesia started to embark on an industrialization program in the late 1960s. In the 1980s, the company was slowly transferred to the second generation leader, and continued to grow and prosper until it became part of the top-20 business groups in Indonesia. The businesses included glass manufacturing (with Asahi), personal care products (with Kao), packaging (with Dai Nippon) and MSG production. The role of Rodamas in these partnerships was to deal with local regulations, hiring local personnel, and distributing the products in Indonesia. When the then President Suharto was toppled in the Asian Crisis in 1998, Indonesia underwent several drastic changes, including the transition to democracy. Its economy became more open, and foreign firms were allowed to operate in the country without having a local partner. In addition, several global business developments, including the tendency of multinationals to rely on lawyers and consultants, rather than local equity partners, threatened the Rodamas business model. In view of this, the current leader, Mr. Mucki Tan, is reconsidering the future of his company and weighing a few options. Students are asked to analyse the company and its environment, decide on a strategic direction and reflect on the consequences.