The relationship between business strategy and corporate financing needs of PT PAL Indonesia
Shipbuilding industry is a dynamic, capital intensive, human intensive as well as technology intensive industry. With such characteristics, this industry is also easily affected by the fluctuation of global economic situation.rnrnKey players in the world's shipbuilding industry, which are able to survive under any economic situation, are usually able to maintain a long-standing relationship with their customers, keep updated with the latest shipbuilding technologies, and are able to maintain their production costs more competitive than other shipbuilders to remain competitive. This has somewhat reflected the grand strategy introduced by michael porter in his book competitive advantage (porter, m, 1980).rnrnIn the south east asia region, there are few significant players in the industry. We can name few major shipyards in this region, such as seMBAwan, pan united, keppel which are all singapore-based. In addition to these few players in the region, indonesia has been improving its position as a considerable player in the south east asia. However, with the present considerable difficult economic situation in indonesia, the indonesian government has not placed a significant priority to support the growth of the shipbuilding industry, which actually can help enhance and contribute to the indonesian economic recovery. This is mainly because shipbuilding industry is characterized by its nature as among others being capital intensive, while the indonesian government is presently not in a favorable fiscal position to provide capital support to the industry (indonesian budget deficit reached rp. 69 trillion per december 2002 as cited by national fiscal agency, in its report february 2003).
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