The table shows the U.S. advantage in output rather than the U.K., once output is standardized, productivity in the U.S. industry is about 1.5 times that in the U.K. At the time (1960s) American Labor cost were about three times that of the U.K. Thus if the U.K. produced 50 aircraft, the U.S. would build 133 units based on the same unit cost (32). The unit costs of the U.S. aircraft were about 17.5 % less than in the U.K. time delivery.17/. Post-sale support is a key element in aircraft procurement, because aircraft operators are concerned with ease of service, product reliability, parts availability, and the low long-run operating cost.

C. IPTN ENVIRONMENT
1. External Environment
          The segment of the global markets for commuter aircraft is large, open, and attractive. Once a brand name has a reputation of quality, the price becomes a secondary factor. An example is the Lockheed C-130. Almost all of the Air Forces of the world operate this aircraft. But, on the other hand, there are too many requirements to enter a similar, competitive aircraft markets. There are many players eager to enter the market, although the business is risky with high capital spending and global competition. IPTN is a state-owned company almost completely dependent on the government monetary condition. The Indonesian government will continue a subsidy as long as IPTN output is below the break event point. Unfortunately, Indonesia income per capita is just US $ 676 in 1993. This means that Indonesia is still among the low-income developing countries (LDC) category. Thus, most of the Indonesian people still need more budget subsidy to improve quality of life, as well as, the quality of an industry sector i.e., IPTN as a domestic supplier.

2. Internal Environment
          The strengths of IPTN is its real property, including the skilled personnel who have been trained abroad and its manufacturing facilities since 1976. IPTN has invested multi-millions US $ in its business, if it cannot optimize its strengths, sooner or later the company will be bankrupt as a result of misalignment of its strategic management. IPTN as a national asset should discover its weaknesses and become a competitive company in the global market.

THE GENERAL ENVIRONMENT OF IPTN
          A number of factors dictate IPTN strategies, they are the general environment (social, technological, political, economics), the industrial environment (competitive, market, industry structure, suppliers, customers and other significant issues) and environment of the organization itself. Where James K. Brown defines an issue as:
          ....condition or pressure, either internal or external to an organization , that, if it continues, will have a significant effect on the functioning of the organization or its future interest.18/

          These issues should be bottom-line issues, because the IPTN strategy is always confronted with global trends, especially in the commuter-class markets. As Michael Kami wrote.19/. the success of organization plans come from outside the organization, not from the inside out. Based on environment assessment approach, Bryson.20/. identified that the internal environment of an organization might contain both its internal strengths and its weaknesses. On the other hand, opportunities and threats may be discovered by observing a variety of external environment trends. This chapter will discuss the organization , the aircraft industry environment, and the relevant general environment respectively.

1. The Organization
          In a large organization, such as the IPTN, several levels of management structure may be involved in strategic decision-making. Decision s may be shaped by all involved in the process of performing the analysis, from the chief engineer through the president-director, to satisfy stakeholder wants and needs. Where stakeholders is defined as:

• One who has a stake (sense) in something, especially a business (The Oxford English Dictionary).21/.

• A person or group that has an investment, share, or interest in something, as a business or industry (The American Heritage Dictionary of the English Language).22/.

          Adopted from the 1978 book Strategic Planning and Policy by King and Cleland, Digman defines stakeholder as a claimant view of company responsibility.23/. Thus the stakeholder of IPTN are those individuals or groups who have a stake, or claim, with IPTN :

Figure 1. Stakeholder of IPTN

Obviously, IPTN involves a variety of stakeholder. They are:

• Agency for Strategic Industries Management (BPIS) as a stakeholder with an interest in the election of board of directors. BPIS is chaired by the State minister for Research and Technology. This institution has been assigned to coordinate state-owned companies including their management, technical guidance and control of state-owned enterprise operating in the field of strategic industries. BPIS works like a holding company striving to enhance technology use, productivity, and the efficient operations.

• Minister of Treasury as stockholder with the interest of the inspection of company books, and participation in distribution of profits and assets on liquidation. He / She reports the state-owned companies profile to the president yearly. Especially in the case of IPTN, most policy direction comes from the president based on the President-director's proposal.

• State-owned Banks, as creditors. Their interest is in a legal proportion of interest payments due and return of the principal of the their investment. The cumulative investment in IPTN during the development period of 1976-1994 was US $ 1 Billion,24/. This source of government subsidy is not from official budget, but is taken from saving. That source is called off budget.

• Employees, have an interest in economic, social, and psychological satisfaction. The total number of employees is 15,500, most of them are under 40-years old with the composition of: 24% with high educational level, and 60% have passed high school.25/ This environment is different from industrial environment in U.S., in Indonesia workers and labor unions have long recognized the vital role of new technology in the competitive climate, they are aware that dialogue among management, workers, and the union representatives is beneficial.26/.

• Customer of IPTN's products, have interest in the services provided, technical data, suitable warranties, spare parts, R & D leading to product improvement, and customer credit. Customer complaints usually concern the nature of a slow response for service and information from IPTN.

• International and domestic suppliers, direct their interest to a continuing source of business : credit obligations, contracts, purchasing, and receiving goods and services. Since the local content of IPTN product is low, dependency on the international suppliers is high. The import-savings figures have to be based on an expenditure which would have been incurred in the absence of purchases from the domestic industry. For this purpose the figure of domestic sales has to be adjusted for any purchases of higher-cost products and for government subsidies.

• Central and local government, whose interest are taxes, customs, properties, legal, and protection. The IPTN industrial areas have impacts to local area facilities, such as utilities, water, waste treatment, and environment. IPTN receives financial and political support from the central government, in turn the government targets the aircraft sector for rapid development to promote industrial prestige and technological progress.

• Competitors have an interest in norms and regulations established by the global aviation communities, with an interest in the place of productive and healthful employment of the community. Michael E. Porter.27/ wrote that the industry is the arena in which competitive advantage is won or lost. There is no one universal competitive strategy, and only strategies tailored to the particular industry and to the skills and assets of a particular firm succeed.

• The general public and society, as a whole, has interest in fair price for products and the company fair profit for the company. Customer of the airline usually has a favorite aircraft which they prefer to fly.

• Higher education groups, have an interest in IPTN contribution to domestic education. IPTN hires higher education graduates from surrounding Bandung, because their schools usually are in agreement with IPTN values and sub-culture. According to Occupational Profile of the Aircraft and Parts Industry 1970.28/ based on the U.S. Bureau of the Census of Occupations.

          Collaboration between the higher education and industry, not only as technology donor-recipient, but is also interactive and has a participative nature. According to GV Kamala.29/ the anatomy of a relationship is :

• Industry has the problem, the school's have influence because the problem is relevant, attractive and a challenge, industry needs are for feasibility solutions.

• Organization-Consulted, this means commitment and deliverability of research.

• Organization-Consulting, in terms of techno-economic capability, credibility, and commitment.

• Benefit, both parties receive benefits during interactive learning and mutual advancement. Other benefits trigger indigenous R & D, industry receives high quality research, and increases its industrial competitiveness. In the long term both will increase their economic development, income revenue, and savings.

• Organization-Supporting, is a policy of openness in the company.

  
  
  

  Number	Occupations	Percentage
  1	Aeronautical Engineers	5.91
  2	Mechanical Engineers	2.36
  3	Drafters	2.04
  4	Science Technology Engineering	1.67
  5	Accountants	1.58
  6	Electrical Engineers	1.5
  7	Industrial Engineers	1.46
  8	System Research Operatives	1.05

  
  Table 2. Occupational Profile of the Aircraft Industry
  Source : U.S. Bureau of the Census of Occupations, 1970
  
  

  Department of Transportation of a consumer country, has interest in airworthiness certification. United States is the largest market in the world (57 % as of 1 March 1995.30/ ) and is recognized as the authority in commercial aircraft certification. For example, after CN-235 attained the Federal Aviation Administration (FAA) certificate Part 25, which covers transport aircraft, in late 1986, there was an increase in number of airplane sales.31/.

  President-director represent the management board. Minister Habibie has an imperial style.32/ framework of strategy, with the leader of a small top team driving the strategy, while the commander provides direction, on the other hand the organizational members obey orders as if they were soldiers. IPTN is called a strategic industry, and is controlled directly by Minister Habibie. Also as Minister Habibie is the BPIS chairman, and has more than twenty important positions in steel, machinery, explosive, shipbuilding, telecommunications, arms, electronics, free trade zones and The railway industry. Yet the president has given his full support to this undertaking.

2. The Industry Environment
          The industry structure in which IPTN competes is dynamic where competitive position reflects an unending battle among competitors. To analyze the structure of the commuter aircraft market, useful tools used are the inner/outer circle model and Porter Model.

          To understand the position of IPTN in the global commuter aircraft market, the inner/outer circle model suggests that there are rarely more than three inner circle players in a particular market. Other players can usually be categorized as niche players. Based on past sales volume and revenue data, where the percent share by region is Europe (27%), Middle East and Africa (4%), South America and Caribbean (4%), North America (57%), and Asia Pacific (12%) the position of the players can be determined and we can identify the players in the inner or outer circle of a particular market.

          The global market (owned and leased) rank for commuter aircraft as of 1 March 1995 is : 33/.

-		Saab 340 and 2000 (Sweden)		358 each
-		BAe Jetstream 31, 41, and 61 (United Kingdom)		476 each
-		Embraer EMB-120 (Brazil)		286 each

          According to the theory, other manufacturers are in the outer circle. They are shown in Table 2. The world commuter's market is dominated by the big three. They are established and secure in the inner circle position, surrounded by the outer circle manufactures. (See Figure 2).

          With a look at the past sales, the IPTN can be considered in a periphery position. David D. Hood.34/. related a classic example in the automotive industry. In the U.S. market General Motors, Ford, and Chrysler are known as the players in the inner circle. Most of the outer players have been acquired (e.g. Jeep by Chrysler) or have been bankrupt (e.g. Studebaker, Nash). Foreign can manufacturers, in the outer circle, uses niche strategy to penetrate a segment of the market (e.g. Jaguar, Rolls Royce, Mercedes Benz, BMW, Infinity, and Acura, for example, and maintain their quality among "fanatic" consumers).

          If IPTN is able to penetrate the commuter segment of a global market, it might use a niche strategy. Where IPTN can specialize in a variety of ways; by product type (e.g. high quality, lifetime warranty of commuter airplane), by type of customer (e.g. cargo airplane), or by geographical area (e.g. tropical/corrosion resistant airplane). If it choose this strategy, IPTN must dominate the niche, because of the nature and characteristics of the aircraft industry.

Type	Ordered	Delivered	% Share
Category 10-19 seat
Beech 1900D	N/A	133	20%
Dornier 228	222	219	32%
Fairchild Metro	104	75	11%
Category 20-39 seat
DHC-8-100/200	299	287	29%
Dornier 328	151	21	2%
Category 40-59 seat
ATR 42	284	274	44%
Canadair RJ	98	57	9%
DHC-8-300	110	103	16%
Fokker 50	201	186	30%
Category 60-90 seat
Avro RJ 70/80/100	72	30	6%
ATR 72	152	141	29%
Fokker 70	44	1	0%
Fokker 100	274	262	53%

Table 3. Current-Production Aircraft on Order and Delivered as of 1 March 1995
Source : INTERAVIA, April 1995




Figure 2. Inner/Outer Circle Model

          As a new entrant, IPTN must develop a sophisticated understanding of the structure of the aircraft industry and how it is changing. The Porter Model is a market analysis tools, it prompts a business to evaluate its competitors, the threat of potential new entrants, the bargaining power of suppliers, the threat of alternatives, the bargaining power of customers, and channels used to reach customers.35/.

          The market for aircraft is worldwide and homogeneous in character, and the customers are highly sophisticated. The choice of a particular type of aircraft is a critical decision for the consumer, because once made, the decision commits the customer to a particular type of equipment over a long period of time. The customer will carefully particular type of equipment over a long period of time. The customer will carefully study the various options in the market segment, they will also weigh the experience of other consumers. Communications in the airline industry is open, and the performance of an aircraft type quickly known, despite its selling price.

a. Rivalry Among Existing Competitor
          The economic forces implicate traditional rivalries in the market for the commuter segment, the inner players (Saab, BAe, and Embraer) can more easily offer attractive prices, products, distribution, and after sales services. Based on these advantages they are potentially more cost effective, have better market access, and present a difference in products, services, and commitment. The higher costs of competing, such as expenditure for advertising, marketing, and R & D will not have as great of an effect on the companies profit in competitive sales.

          Competition among producers in the market is risky, some of them share both risk and capital financing, the European aircraft manufacturers made concessions for sales to organization,36/ such as :

• CThe BAe's Jetstream 41, which claimed a backlog of 100 out of 139 orders, just delivered 39 aircraft in an ongoing joint-venture agreement with ATR consortium, the most popular aircraft in North America.

• Joint venture between DASA (formerly MBB, Germany), Samsung (Korea), and Aviation Industries of China to a build a 100-seat aircraft.

          Higher cost of competing, such as expenditure for advertising, marketing, and R & D will reduce profits in competitive sales.

b. The Threat of New Entrants
          Besides IPTN, the entrants in the same market segment are Japan's 100-passenger YFX turbofan, Fokker 70, Saab 2000, 64-seat Ilyushin II-114, 100-passenger Tu-334, Bombardier Dash 8-400, and the 70-seat Canadair RJX. The threats of new entrants limits the overall profit potential, because each of them has their comparative advantages, brand loyalty, and economies of scale. In Table 4 according to the BAe projections, is the forecasting of regional turboprops aircraft deliveries.

c. Bargaining Power of Buyers
          The effects of these forces will force prices down, high quality products, more services, and competition are encouraged. On the other hand buyers would have more selections, switching costs, differentiation, and entry barriers. IPTN on its latest product, N 250, offers a "fly by wire" control system, beside controlling an aircraft this also directly affects the flight performance, speed, and flight quality. This system was adopted from a higher class transports, the A 320. But economically, the price may well decrease after IPTN succeeds in providing quantities of aircraft. This is supported by the learning curve in the policy analysis theory.

Year	19-seat	30-seat	50-seat
1995	40	105	57
1996	38	103	58
1997	37	113	61
1998	35	115	62
1999	35	120	62
2000	38	114	66
2001	37	107	64
2002	39	108	64
2003	35	101	59
2004	36	99	57

Table 4. Forecast of Regional Turboprops Aircraft Deliveries, 1995-2004
Source : Jetstream's J71 forecast, INTERAVIA, July/August 1995, p. 25.



Figure 3. Porter Model

          The strength of these forces are a function of the many characteristics, of the buyers, including the buyers' risk at the sales price, which is a significant fraction of buyers' cost at the products' price. Co-production agreements, joint licensing arrangement, and offset requirement are often more important that price. For instance, with offset agreement between IPTN and Malaysia government, IPTN was able to sell CN-235 by agreeing to aid in the sale of Malaysian-made light aircraft trainers and cars.

d. Threat of Substitute Products
          Many substitutes for the commuter market exist and limit potential returns on price, if IPTN should improve the products' price it should also improve the company's performance. Through professional management, eventually consumers are willing to pay more for the higher quality. For example, after 1991 many American's aerospace business lost their market of up to 30%. However, the projections are that airline passenger travel over the next 20 years will increase 5.2 % per year. Many American companies applied "lean manufacturing"37/. Adopted from MIT International Motor Vehicle Program, by reducing development, production cycle time and product defects.

          Substitutes for commuters market segment are abundant, according to INTERAVIA"S report, as of 1 March 1995 in the category 40-59 passenger, just 22 % of the orders were delivered. In the category of 60-90 passenger, backlogs in delivery were 82 % of the ordered aircraft.

e. Bargaining Power of Suppliers
          Suppliers have a bargaining power over participants in industrial environment through price's threat, and reduction of the quality of goods or services. A threat to prices, if suppliers dominate the industry, for example, most of the N 250 equipment is made in U.S.A. Since IPTN is just a peripheral group in aircraft business, to lower costs it was necessary to plan to build an assembling plant in Mobile, Alabama. In other words in the industry IPTN is not an important customer of the supplier group. On the other hand, in IPTN calculation, decreasing in transportation and storage cost would lower its sales price.

          IPTN's plan can be placed in a Gogel and Larreche matrix,38/. Gogel and Larreche identify four types of competition in product strength and geographic coverage, which :

• Kings, have a strong competitive position. It is the ideal effective strategy.

• Barons, are equal with Kings but only in a regional area. Many other companies want to become its suppliers.

• Crusaders, have the potential to become larger in the market, but its product is weak compared to the competition.

• Commoners, era typically a small company, weak in products and marketing, but locally strong under government protection.

          Dependency of IPTN on foreign suppliers is high, because of scarcity of domestic suppliers. This condition makes it difficult for IPTN to compete in price on the international market.

Figure 4. The International Competitive Posture Matrix
Source : Phillips, Chris et. al., International Marketing Strategy, p.237

THE PROSPECT FOR THE FUTURE OF THE IPTN
1. GENERAL
          As shown in Chapter V, government investment has not statistically significant effect on economic growth. The statistics suggests that the governments attempt to increase economic growth through state-owned companies, including IPTN productivity, with government spending has not effect. The current Indonesian fiscal position can be characteristically as having a large external debt relative to the GDP. Foreign government debt is almost US & 100 Million.39/., with heavy servicing requirements.

          As a state-owned company, IPTN has been protected from the market tests of profitability. The government has introduced many rules to protect its investment in IPTN since 1076. These rules require domestic airlines to use the IPTN products, although their operation costs are higher. If this policy continues, in the long run IPTN will find it increasingly difficult to compete in the global market. Asian Defense Journal.40/. in an article, forecasted that in the commuter segment, more than 15 firms are sharing the market of US $ 100 Billion for some 8,000 aircraft to be manufactured during the next 20 years. This in light of some 20 types of aircraft proposed. Thus, many European and American companies are unwilling to see the development of manufacturing projects in Asia.

          This chapter discusses some options for IPTN to effectively enter the international competition, where an environment is emerging that has an uncertain future.

2. REDUCING DEPENDENCY TO THE GOVERNMENT
          As written by Henry Bienen and John Waterbury.41/., most state-owned companies are designed to meet one or more of the following objectives :

• Equity objectives : redistribution of income, job creation, and regional development.

• Infra-structure development

• Collection of monopoly rents.

• Filling in for a deficient private sector.

• Taking over failed private enterprises.

• Countering monopolies.

• Nationalizing foreign enterprises.

• Strengthening economic sovereignty

• Building national strength through the defense sector.

          Government policy to develop IPTN started with taking over a small Air Force enterprise and an obsession to build national strength through the defense sector. After the oil boom in 1973, Indonesia received excessive return from its oil sales, as recorded by IMF. Table 3 shows oil exports as recorded by the IMF.

          Suddenly, many people and groups wished to deviate from the National Development Planning Programs. IPTN was established, (sponsored by Pertamina, the state-owned oil company) for the purpose of job creation and regional development. At the time, Pertamina as a "Godfather", had an abundant supply money from an unanticipated increase in income. Later, mismanagement of Pertamina, financially mismanagement, resulted in the "Pertamina Crisis" in 1986. Support for IPTN was handed over to government through a restructuring of IPTN's status. The Minister of Finance, acts as the government's shareholder in IPTN a state-owned enterprise.

Commodities (US $ M/Year)	1972	1973	1974	1975	1976
Crude Oil Products	913	1609	5211	5311	6004
Crude Oil	834	1383	4680	4933	5652
Crude Oil (Unit Value, '90=100)	12.7	17.3	53	58.2	59.0
Crude Oil (Ofc.Price, '90=100)	12.5	18	53.7	56.9	57.9
Oil (volume, '90=100)	64	85	151	148	169
Crude Oil ('90=100)	124	152	157	158	180
Foreign Exchange	533	753	1386	577	1492
Deposit Money Banks (Assets)	377	521	722	475	690
Liabilities	323	610	622	612	650

Table 5. Indonesia's Oil Exports, 1972-1976
Source : IMF, International Financial Statistics Yearbook, 1994, pp. 420-422

          Economically, IPTN grew under protection, both under Pertamina as a founder, or the government as the current owner. Both, despite their financial resources, do not have experience in the international aircraft business. IPTN's ambitious to produce its own aircraft, appears to be a political decision making rather than one based on economics. The evidence for this is that the N 250 maiden flight was to commemorate 50 years' Indonesia's independence but marketing for N 250 is still a long way off.42/.

          Considering the aircraft business has a long-term return on investment. Eventually IPTN should export its product competitive in quality and at a competitive price, it should have a management that quickly responds to the market environment. This can be implemented if the structure that is relatively small compared to typical government bureaucracy. Under government control, IPTN may have a high opportunity costs in the time for management make decisions for their complicated tasks.

          For example, Merpati Nusantara (one of the state-owned airline company) must buy 16 IPTN's (CN235) aircraft with a base price of US $ 13.5 million each, to help IPTN cash flow. Merpati refused the government requests, it claims that the IPTN-manufactured planes are expensive to operate and maintain. Operation cost of CN 235 is high, US $ 110,000 per month compared with Boeing 737-200 which is US $ 105,000.43/. The airline's management also has objected to the financial conditions of the lease, arguing that the leasing charges are excessive and will only contribute to Merpati's continuing and current financial problem.

          Consumers know the products' name through advertising, sales force, and other marketing strategies. Consumers usually seek a popular brand rather than sale price, benefits or other specifications. For IPTN, under a government subsidy, it is difficult to request a large portion of the budget for worldwide marketing. Although the board of director has the authority in finance policy, their priority is employees' wages and daily operation of IPTN. As discussed in Chapter V, the percentage that the government contribution to the GDP is very low. Distinction between First Model and Second Model showed a real difference in the statistical analyses. Thus, government expenditure including IPTN's investment, or government expenditure without IPTN's investment, does not significantly impact the GDP. This means government subsidies as investment in IPTN are relatively small in the development of aircraft manufacturer. Further, it could cause IPTN to be ineffective in its sales force and marketing efforts.

          Reducing government intervention by deregulation of the company, in the long run, may be an attempt to strengthen the government fiscally, both through deficit reduction and by bringing reality to IPTN economy activities. Diminishing government subsidies to state-owned enterprises, is essential to lower inflation, and to lure private and foreign investors.

3. PREPARE TO INVITE CAPITAL INVESTMENT
          IPTN is an Indonesian government asset, since 1976 the government has been invested totally about US $ 585.10 Million excluding land, manpower, and Air Force properties. The government and IPTN management should anticipate future trends. Basically, IPTN should determine what its attitude toward cooperation with interested capital investors is and who they are likely to be. Openness is needed by the appraising investor before an investment is made. This openness is difficult to implement in a domestic culture, such as Indonesia.

          Porter wrote, in getting a general overview of company, the observer can obtain raw data about who is in the company, industry studies, and annual reports. But, he suggested, characteristics of structure and competitors can be found in raw data. They are the result of analysis of raw data. Most of the real data is gathered from field observations. To get more information, the observer usually makes contact with third parties, who interested in the company, but do not have a business relationship with the company. These parties are local press, unions, financial community, international organizations (e.g., FAA, IMF, World Bank). Third parties will give information more openly, recommend the best alternates, and identify key stakeholders who have a major role in the industry. Observers could compare the initial data with data from inside the company, for example, market research staff, sales force, service organization, former employees, engineering staff, purchasing department, and R & D department. Other information may come from Service Organization for example, international trade associations, investment banks, consultants, auditors, commercial banks, and advertising agencies.

          In the 1980s, developmental theorists suggested a "market-friendly"44/. Approach to economic development. Their point is that the government in developing countries should reduce its interventions in domestic industries. The idea behind this approach is that domestic industries grow by properly following market law. For this to work the government must support it through a legal and regulatory framework.

          Each company has its own characteristics, for IPTN, internationalization process is required to reach a break event point, although this will be done in a long term of at least 25 years. Chris Phillips 45/. Adopted Cavusgil and Nevin's chart (1981) of the international process as follows :

Process Stage	Critical Activity	External and Internal Determinat
a. Domestic Marketing	Solely in Home Market	Attitude Barries
b. Experimental in Volvement	An Evaluation of the Feasibility of Exporting	Internal Stimulus, Unsolicated Orders
c. Active Involvement	Systematic Exploration and Planning	A Willingness to make Resources Available
d. Commited Involvement	Executes International Marketing Planning and Marketing Mix Strategy	Long-term Commitment to Markets

Figure 5. The Internationalization Process of Company (from a to d)

          So far, the IPTN attention are in the home market having a monopoly in commuter aircraft sales under government protections as its basic strategy. To rise to the next stages, IPTN should take into consideration critical processes and other determinants.

          Openness in international flow of trade, investment, and technology eventually will support competitive domestic forces. Domestic companies should improve their production processes through efficiency to attract foreign investment. A competitive micro-economy will gain from domestic and international trade if it is supported by a stable macroeconomic foundation.

4. COMPANY FACTORS
          All of all, the top executive's strategy is a key factor in developing international strategic planning of IPTN. Their commitment to improve the company image in the international market will color the IPTN performance. If they exploit their products for competitive advantage in a niche segment will this develop enough customer goodwill?. The niche might be in a strong and concentrated market and requiring product knowledge, with direct competition in the areas of : 46/.

• A prestige image, are the customers proud of IPTN's brand name.

• A price discounting given by IPTN offers an attractive service to the customer.

• A cheaper alternative among other competitors.

• Cost reduction in production, marketing, sales and after sales service.

• Product innovation by IPTN involving the customer.

• Improved IPTN services to the customer, by reducing communication constraints.

• Innovation in distribution system by building world wide supply network.

• Faster delivery, to reduces lead time of the on customer orders.

• Intensive advertising through mass media around the world based on strategic planning.

• Market development in domestic, regional, and international.

          On the other hand, Phillips suggested.47/. that before IPTN's executive decides to adopt an international marketing strategy, it is necessary for them to ask themselves about the total cost implications, the company brands, and the key factors for success in the industry. If there are many constraints, IPTN may focus on one of these various options. For example, IPTN may do the following : first, IPTN can play major markets by learning from other companies ; second, by standardizing the IPTN's products could be the global cost leader, third, by performing higher activities in the value chain, such as R & D and manufacturing in other countries and fourth, by integrating with competitors, IPTN moves across countries through joint ventures.

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
1. SUMMARY
          The following objectives were addressed in the discussion of this re-search :

• Determine the major contributors to the IPTN environment within the scope of this thesis.

• Develop a model that predicts the impact of IPTN's investment on the GDP within the scope of this thesis.

• Perform a time series analysis through OLS (Ordinary Least Squares) methods to determine the affect of IPTN's investment on the GDP rate.

          The discussions addressed within the scope of IPTN's investment and macroeconomics aspects, ceteris paribus. Private consumption, capital investment, exports, imports, and government expenditure were used as independent variables in relation to GDP, with dependent variables used to define the impact of IPTN's investment as a small portion of government expenditure on the GDP. The thesis observation uses for IPTN's investment the data obtained from the manufacturer's publication. The IPTN's investment was selected, because of IPTN's status as the state-owned company, which is assumed that its budget is part of government expenditure.

2. CONCLUSIONS
          The following conclusions were reached in this thesis :

• IPTN's investment as a part of government expenditure does not have a significant impact on economic growth, measured by GDP. This subsidy it is predicted will be given as long as IPTN's sales are below the break even point.

• Based on the IPTN's history and organization structure, IPTN was created not to compete in the world market, but to accustom Indonesian workers to high technology manufacturing. Yet, economically, IPTN is an expensive "toy" for the Indonesian government. The manufacturing infrastructure has not grown as a result of the governments support of IPTN.

• The models were typical econometrics ; they are based on and through necessity on incomplete data. The result is a trend for IPTN in the future. Ceteris paribus. However, the factors affecting IPTN may vary. For example, if government were to follow a strategy to improve the IPTN performance in view of economic realities.

• The top executive strategy is the key factor in developing an international strategic planning of IPTN.

3. RECOMMENDATIONS
          The following recommendations are made as a result of the analysis of this thesis :

• The Indonesia's government has invested billions of US dollars in IPTN. Now it needs to develop strategic planning to make IPTN's products more marketable.

• To make IPTN more liberal, the Indonesian government should share the risk with foreign and private investors. More investment in IPTN is needed to enlarge the marketing and sales its products.

• IPTN should focus on a niche market with its specific products or regional markets. This would allow the company to grow gradually in increasing strength.

          This study should be continued to place IPTN among its worldwide competitors in the future. IPTN is one of the projects of which the Indonesian people are proud ; they would continue to support IPTN if it were able to grow as a well-managed company. Finally, management improvements in the state-owned companies such as IPTN, would reduce dissipation of capital.

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Biodata
Marsekal Pertama TNI Ir. Abdul Madjid, MSc.
Lahir di Magelang, 29 Juli 1947. Stelah tamat SMA, melanjutkan pendidikan di AAU Yogyakarta, setelah lulus sebagai Taruna AAU tahun 1970 dengan pangkat Letnan Udara dua dan bertugas di POLOG 10 KOMATAU (sekarang Depohar 10 Koharmatau). Dikaruniai dua putera-puteri. Pendidikan karier dalam bidang kemiliteran yang pernah diikuti Sekkau dan Seskoau. Saat ini menjabat sebagai Kadislitbangau (Kepala Dinas Litbangau Bandung) dengan pangkat Marsekal Pertama TNI. Pendidikan lain yang perenah diikuti antara lain : Program S-1 Teknik mesin di STTAL di Surabaya, dan S2 Management Systems di Naval Posgraduate School United State Navy, Monterey, California Amerika Serikat.