International Expansion Strategies of PT Pupuk Sriwijaya: Entry Modes Choice and Motives for Investment

This project paper will be focusing only how State-Owned Enterprise (SOE’s) companies decide to go abroad and select their mode of foreign market entry. For better understanding of this project paper topic, several questionnaires will be formulated on the concerns and focusing on the motives for internationalization, approaches to foreign market entry modes and select the best entry mode strategies to enter the international market. In order to develop a holistic overview of internationalization process and business strategies in Indonesia perspective, an Indonesian holding company – PT Pupuk Sriwijaya has been selected and used to be the foundation of this study. The purpose of this study is to examine motives and reason that impacts SOEs approach to select the mode of entry for their company, through determine their own capabilities, readiness factor, resource availability and other factor that is come from inside company to do the business expansion. All data collection has been gathered through Delphi technique, which is unlikely methodology that is used by general master’s student to collect their data. In Delphi technique, all the data has to be collected from experts who have been working and experienced in the particular company. Some experts from the specific company have been chosen as the respondents to answer some questionnaires. Proactive factors that influence SOE’s decision to choose mode of entry includes managerial urge, unique product, marketing advantages and economies of scale. Reactive factors that positively relates to this paper work only involve risk diversifications and government regulations for doing business outside from their country. Pusri’s is more comfortable to use export as a first mode of entry and they expect to reached another level for entry mode namely Foreign Direct Investment. Four internal factors that positively relates to this paper work are company size, government regulations, international experience and product.