OF THE INDONESIAN RUBBER INDUSTRY
By
Novia Ayu Pratama 1-3109-075
A Thesis submitted to the Faculty of
BUSINESS ADMINISTRATION AND HUMANITIES
In Partial Fulfillment of the Requirements for BACHELOR’S DEGREE
IN
BUSINESS ADMINISTRATION
Swiss German University EduTown BSD City
Tangerang 15339 INDONESIA
July 2013
Revision after the Thesis Defense on 18 July 2013
Novia Ayu Pratama
STATEMENT BY THE AUTHOR
I hereby declare that this submission is my own work and to the best of my knowledge, contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.
Novia Ayu Pratama
Student Date
Approved by:
Junaidi Sinaga, MBA
Thesis Advisor Date
Dr. rer. nat. Linus Pasasa
Thesis Co-Advisor Date
Parhimpunan Simatupang, SE, MBA
Dean Date
Novia Ayu Pratama
ABSTRACT
ANALYSIS OF MARKET ATTRACTIVENESS OF THE INDONESIAN RUBBER INDUSTRY
By
Novia Ayu Pratama Junaidi Sinaga, MBA, Advisor Dr. rer. nat. Linus Pasasa, Co-Advisor
SWISS GERMAN UNIVERSITY
The purpose of this study is to analyze the market attractiveness of the Indonesian rubber industry. The data used in this study are secondary data, collected from agencies such as the World Bank, Directorate General of Estate Crops, and Statistics Indonesia. The data are analyzed using Structural Equation Modeling (SEM) to find out the correlation between the variables. This study uses time-series data from 2000- 2011.
Based on the results of research, it can be seen that rubber consumption has a positive moderate correlation with the market attractiveness of the Indonesian rubber industry, while rubber production has a positive weak correlation. This research also found that rubber price has the highest influence on rubber production with a strong correlation, and GDP has the highest influence on rubber consumption with a moderate correlation.
Novia Ayu Pratama of the Indonesian rubber industry, there must be sustained demand for rubber consumption, which is influenced quite significantly by the factors of GDP and automobile production. When the GDP and automobile production in rubber export markets increase, it will indirectly increase the level of market attractiveness of the Indonesian rubber industry.
Keywords: attractiveness, consumption, GDP, production, rubber.
Novia Ayu Pratama
DEDICATION
First of all, I would like to express my upmost gratitude to dear God who is always by my side. He made it possible for me to finish this thesis.
I dedicate this thesis to my beloved parents and siblings whose love and support never fails to encourage me pursue the best of me. I am deeply grateful for their patience in giving me the long lasting support and for believing in me.
I would also like to specially thank Evgeny for his sincere love and encouragement and for always believing in me.
To all of my friends who filled my days with laughter and smile, thank you for the joyful moments and all the memories shared. My sincere gratitude goes to Amelia, Metha, Deandra, Sandra, Rose, and Michelle for all the encouragement and support throughout the whole process of this thesis making.
I am truly grateful for the opportunity to learn and grow together with each of them that in the end makes it possible for me to finish this thesis. Thank you.
Novia Ayu Pratama
ACKNOWLEDGMENTS
I would like to give my deepest gratitude to everyone involved in the making of this thesis, especially to my thesis advisor Mr. Junaidi Sinaga, MBA and my co-advisor Dr. rer. nat. Linus Pasasa for their time, patience, support, and non-stop assistance along the process.
I would like to thank Michael Earley for his endless support during the thesis making, and also for his help in making my thesis better.
To all my lecturers, I would like to express my gratitude for sharing your knowledge and experiences during these 4 years of study.
Special appreciation to the interviewees and all other sources that provided data used in this thesis. Thank you so much.
Novia Ayu Pratama
TABLE OF CONTENTS
STATEMENT BY THE AUTHOR ... 2
ABSTRACT ... 3
DEDICATION ... 5
ACKNOWLEDGMENTS ... 6
TABLE OF CONTENTS ... 7
LIST OF TABLES ... 11
LIST OF FIGURES ... 12
CHAPTER 1 – INTRODUCTION ... 13
1.1. Background ... 13
1.2. Global Rubber Industry Profile... 15
1.3. Rubber Industry in Indonesia ... 16
1.4. Rubber Product and Export Profile ... 18
1.5. Rubber Industry Structure ... 20
1.6. Research Problem ... 22
1.7. Research Purpose ... 22
1.8. Significance of Research ... 23
1.9. Thesis Structure ... 24
CHAPTER 2 – LITERATURE REVIEW ... 25
2.1. Natural Rubber ... 25
2.2. Indonesian Rubber Industry Structure ... 29
2.3. Market Attractiveness ... 32
2.4. Export ... 33
2.5. Parameters of Rubber Industry ... 34
Novia Ayu Pratama
2.5.2. Rubber Consumption ... 38
2.6. Theory of Supply and Demand ... 40
2.7. Framework of Thinking... 42
CHAPTER 3 – METHODOLOGY ... 44
3.1. Research Process ... 44
3.2. Type of Study ... 45
3.3. Type of Data ... 46
3.3.1. Primary and Secondary ... 47
3.3.2. Qualitative and Quantitative ... 47
3.4. Data Collection Method ... 47
3.4.1. Qualitative – Primary Data ... 47
3.4.2. Qualitative – Secondary Data ... 48
3.4.3. Quantitative – Secondary Data ... 48
3.5. Research Model ... 49
3.5.1. Research Framework ... 50
3.6. Research Questions and Hypotheses ... 50
3.6.1. Research Questions ... 50
3.6.2. Hypotheses ... 50
3.7. Validity and Reliability ... 51
3.7.1. Validity ... 51
3.7.2. Reliability... 51
3.8. Data Analysis ... 52
3.8.1. Classical Assumption Test ... 52
3.8.2. Structural Equation Modeling ... 54
3.8.3. Standard Score ... 56
Novia Ayu Pratama
3.8.4. Pearson Correlation Coefficient ... 57
CHAPTER 4 – RESULTS AND DISCUSSION ... 59
4.1. Data Profile ... 59
4.1.1. Rubber Production ... 59
4.1.2. Rubber Price ... 60
4.1.3. Plantation Area ... 61
4.1.4. Labor Supply ... 62
4.1.5. Rubber Consumption ... 63
4.1.6. Automobile Production... 64
4.1.7. Gross Domestic Product ... 66
4.1.8. Export Value ... 67
4.2. Descriptive Statistics ... 69
4.3. Validity and Reliability ... 70
4.4. Classical Assumption Tests ... 72
4.4.1. Multicollinearity ... 72
4.4.2. Normality ... 74
4.4.3. Heteroscedasticity ... 76
4.4.4. Autocorrelation ... 78
4.5. Structural Equation Modeling Analysis ... 79
4.5.1. Path Diagram... 79
4.5.2. Path Diagram Interpretation ... 80
4.6. Hypotheses Analysis ... 83
4.6.1. Research Question #1 and Hypothesis #1 ... 83
4.6.2. Research Question #2 and Hypothesis #2 ... 83
4.6.3. Research Question #3 and Hypothesis #3 ... 84
4.6.4. Research Question #4 and Hypothesis #4 ... 84
Novia Ayu Pratama
4.7.1. Rubber Production ... 84
4.7.2. Rubber Consumption ... 86
4.7.3. Market Attractiveness ... 86
CHAPTER 5 – CONCLUSION AND RECOMMENDATION ... 88
5.1. Conclusions ... 88
5.2. Limitations of Research... 89
5.3. Recommendations ... 89
5.2.1. Managerial ... 90
5.2.2. Academic ... 92
GLOSSARY ... 93
REFERENCES ... 96
APPENDICES ... 101
Appendix 1 – Preliminary Interview ... 101
Appendix 2 – Durbin-Watson’s Table of Critical Values ... 103
Appendix 3 – Pearson’s Table of Correlation ... 104
Appendix 4 – Automobile Production of Selected Countries ... 105
Appendix 5 – GDP of Selected Countries ... 106
CURRICULUM VITAE ... 107