the influence of leadership style and excellent production

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By

Tezar Prima Nurhamzah 21553011

MASTER’S DEGREE in

BUSINESS ADMINISTRATION

FACULTY OF BUSINESS ADMINISTRATION & HUMANITIES

SWISS GERMAN UNIVERSITY The Prominence Tower

Jalan Jalur Sutera Barat No. 15, Alam Sutera Tangerang, Banten 15143 - Indonesia

August 2017

Revision after Thesis Defense on 12^th August 2017

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Tezar PN STATEMENT BY THE AUTHOR

I hereby declare that this submission is my own work and to the best of my knowledge, it 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.

Tezar Prima Nurhamzah

_____________________________________________

Student Date

Approved by:

Dr. Dra. Ita Mariza, MM.

_____________________________________________

Thesis Advisor Date

Dr. Antonius TP. Siahaan, SE., Akt., MM

_____________________________________________

Thesis Co-Advisor Date

Dr. Nilla K. Hidayat

_____________________________________________

Dean Date

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Tezar PN THE INFLUENCE OF LEADERSHIP STYLE AND EXCELLENT PRODUCTION

PROCESS THROUGH QUALITY OF PRODUCT TOWARDS CUSTOMER SATISFACTION: A CASE STUDY OF CAST IRON BUSINESS UNIT OF PT

KRAKATAU POSCO

By

Tezar Prima Nurhamzah Dr. Dra. Ita Mariza MM., Advisor

Dr. Antonius TP Siahaan SE. Akt. MM., Co-Advisor

SWISS GERMAN UNIVERSITY

The Main Purpose of this study is to analyze the influence of leadership style and production process to improving quality of product which can achieved Customer Satisfaction especially for cast iron business unit of PT Krakatau Posco. Questionnaire was using for collecting data and distributed to internal Operational Division employees of PT Krakatau Posco. The result of this research is to show the significant influence from Leadership Style (L) and Excellent Production Process (PP) in improving Quality of Product (Q) and Customer Satisfaction (CS). The result from Lisrel program are findings the significant results which have Goodness of Fit Index (GFI) more than 0.90 and supported by empirical data from actual Lean Manufacturing Implementation in Iron Making Plant of PT Krakatau Posco, which leads to conclusion that effective leadership style and excellent production process are have significant influence to improve quality of products and customer satisfaction as well. This research result will be dedicated to generally to all manufacturing company and specifically for internal development PT Krakatau Posco.

Keywords: Leadership Style, Production Process, Quality, Customer Satisfaction, Lean Manufacturing, Manufacturing Company.

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Tezar PN

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Tezar PN DEDICATION

I dedicate this works for the future of the Iron and Steel Manufacturing Company in Indonesia.

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Tezar PN ACKNOWLEDGEMENTS

First of all, I would like to thank Allah SWT for the blessing, direction, love, and support that given to me to finish my thesis work.

I also want to thank to my parents, my wife, and my sister, who have believed in me and support me during the thesis work.

Special acknowledgement and gratitude to both Ms. Ita Mariza as my Advisor and Mr Anton Siahaan as my Co-Advisor, for the guidance and motivation in creation of the thesis.

Thank you to all batch 27 students of SGU MM/ MBA program. It’s been a great experience and honor to spend time and study together with all of you.

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Tezar PN Page

STATEMENT BY THE AUTHOR ... 2

ABSTRACT ... 3

DEDICATION ... 5

ACKNOWLEDGEMENTS ... 6

TABLE OF CONTENTS ... 7

LIST OF FIGURES ... 10

LIST OF TABLES ... 11

CHAPTER 1 – INTRODUCTION ... 13

1.1. BACKGROUND ... 13

1.1.1 Company Profile of PT Krakatau Posco ... 15

1.1.2 Cast Iron Market ... 19

1.2 RESEARCH PROBLEM ... 20

1.3 RESEARCH OBJECTIVES ... 20

1.4 SIGNIFICANCE OF STUDY ... 21

1.5 RESEARCH QUESTIONS ... 21

1.6 THESIS STRUCTURE ... 21

CHAPTER 2 - LITERATURE REVIEW ... 23

2.1 Corporate Sustainability ... 23

2.2 Customer Satisfaction ... 24

2.3 Quality of Manufacturing Product ... 26

2.4 Leadership Style ... 30

2.4.1 Transactional Leadership Style ... 32

2.4.2 Transformational Leadership Style ... 33

2.5 Production Process of Cast Iron ... 34

2.5.1 Lean Manufacturing Process ... 35

2.6 Past Research ... 39

2.6.1 Quality Improvement Analysis Using Lean Manufacturing Process to Achieve Customer Satisfaction: A Case Study at CDW Business of PT TMS ... 39

2.6.2 Product’s Quality and Its Impact On Customer Satisfaction A Field Study In Diwaniyah Dairy Factory ... 40

CHAPTER 3 - RESEARCH METHODS ... 41

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3.2 Population and Sample ... 41

3.3 Data Collection Instruments ... 42

3.3.1 Likert Scale ... 42

3.4 Variable used in Research ... 42

3.4.1 Model of Analysis... 42

3.4.2 Dependent Variable ... 43

3.4.3 Independent Variables ... 43

3.5 Research Questions and Hypothesis ... 44

3.6 Validity and Reliability Test... 45

3.7 Data Analysis Method ... 45

CHAPTER 4 - RESULTS AND DISCUSSIONS ... 46

4.1 Validity and Reliability Test Analysis... 47

4.1.1 Validity and Reliability Test of Leadership Variable (X1) (Pre-Test) ... 47

4.1.2 Validity and Reliability Test of Production Process Variable (X2) (Pre-Test) 51 4.1.3 Validity and Reliability Test of Quality Variable (Z) (Pre-Test) ... 55

4.1.4 Validity and Reliability Test of Customer Satisfaction Variable (Y) (Pre-Test) ... 59

4.2 Descriptive Statistics ... 63

4.2.1 Respondents Profile ... 63

4.3 Analysis of Goodness of Fit Statistics ... 66

4.4 Analysis of Model Structure ... 71

4.3.1 T-values from coefficients results ... 71

4.3.2 Coefficient correlation results... 72

4.3.3 Regression results ... 73

4.5 Secondary Data for Implementation of Lean Manufacturing ... 74

4.6 Hypothesis Analysis ... 78

4.6.1 H1 Analysis : Leadership Style have significant influence in improving Quality of Product ... 78

4.6.2 H2 Analysis : Excellent Production Process have significant influence in improve Quality of Product. ... 79

4.6.3 H3 Analysis : Effective leadership style and excellent production process simultaneously have significant influence to improve quality of product.0 ... 80

4.6.4 H4 Analysis : Quality of Product have significant influence in Customer Satisfaction ... 80

CHAPTER 5 - CONCLUSIONS AND RECOMMENDATIONS ... 81

5.1 Conclusion ... 81

5.2 Limitations ... 82

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APPENDIX I – PRE-TEST QUESTIONNAIRE (English Version)... 87

APPENDIX II – POST-TEST QUESTIONNAIRE (English version) ... 92

APPENDIX III – PEARSON TABLE ... 95

APPENDIX IV – PRE TEST DATA ... 107

APPENDIX V – POST TEST DATA ... 110

APPENDIX VI – ANOVA RESULTS ... 111

CURRICULUM VITAE ... 112