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EXTERNAL AUDIT

Group 4 MMTUI 2015

What, Why, When ?


An
An external
external audit
audit is
is the
the process
process
of
of identifying
identifying and
and evaluating
evaluating the
the
influential
influential forces
forces In
In the
the business
business
environment,
environment,
to
to develop
develop aa list
list of
of threats
threats and
and
opportunities
that
a
company
opportunities that a company
should
should prevent
prevent or
or take
take advantage
advantage
of.
of.

An
An external
external audit
audit provides
provides
information
that
could
information that could impact
impact your
your
strategic
strategic decisions
decisions on
on issues
issues
such
such as
as new
new product
product
development,
development, market
market entry
entry or
or exit,
exit,
mergers
and
acquisitions,
and
mergers and acquisitions, and
resource
resource allocation.
allocation.

Case Study

2013
Source : Annual Report PT Telkom - 2014

2014

Key External Forces


External ???

Economic
Social, cultural, demographic,
and environment natural
Political, legal, and governmental

Technological
Competitive

Competitors
Suppliers
Distributors
Creditors
Customers
Employees
Communities
Managers
Stockholders
Labor unions
Governments
Trade associations
Special interest groups
Products
Services
Markets
Natural environment

AN
ORGANIZATIONS
OPPORTUNITIES
AND THREAT

Key External Forces


Economy
Case example
1. Indonesian economic rate is growing at 5.1%
Interest rate
Inflation rate
Availability of credit
Consumption pattern
Unemployment trends
Stock market trends
Import/export factors
Monetary policies
Fiscal policies
Tax Rates

2.

Disposable income among citizens grew 5%

3.

Interest rate (BI Rate) is growing at 7,75%

4.

Rupiah has depreciated against dollar nearly 2,1%

Source : Annual Report PT Telkom - 2014

Key External Forces


Social, Cultural, Demographic, and Environment Natural
Case example
1. EID Mubarak / Going back to Hometown Pulang
Kampung
Number of marriages
Number of death
Number of birth
Childbearing rates
Lifestyles
Immigration rates
Traffic congestion
Racial equality
Level of education
Sex roles

2.

Digital lifestyle

3.

Indonesian population is growing 1.40%

Source : Data Kependudukan 2014 - BPS

Key External Forces


Political, Legal, and Governmental
Case example
1. Multi Operator Radio Access Network (MORAN)
Government regulation
Special tariffs
Voter participations
Number of patents
Local/nation elections
Antitrust legislation
Lobbying activities
Government budgets
Change in patent laws
National relationship

2.

State / Nation Elections in 2014

3.

Spectrum Re-farming

Ref: SIARAN PERS NO.7/PIH/KOMINFO/2/2015

Key External Forces


Technological

New products
Total spending for RnD
Focus of technological
effort
Productivity
improvement through
automation

Technological advancements can :


Create new markets
Result in a proliferation of new and improved
products
Change the relative competitive cost positions in an
industry
Render existing products and services obsolete
Case example
LTE

Key External Forces


Competitive
Characteristic of the most competitive companies :
Market share matters
Understand precisely what business you are in
Evaluation
Innovate
Acquisition
Make a difference
There is no substitute for quality

How : Competitive Intelligence


CI is involved with developing a systematic program for capturing,
analyzing, and managing external (and internal) information and
knowledge to improve the organizations decision-making
capabilities.

Focus is more on external


views, but some include
internal perspectives.

CI Benefits
CI helps you:
understand the business
environment better;
understand your industry better;
learn about your competitors corporate
and business strategies;
forecast opportunities and threats;
anticipate competitors research and
development strategies;
create a company information library;
make effective decisions; and
act rather than react.

CI Life
Cycle

[Primary source] : Individual information,


dataset, or document/Interviewing people
or meeting individuals who has the
information
[Secondary source] : a newspaper
article, industry report, someone quoting
someone else.

taking the
collected
information and
distilling it into
manageable
snip - Its and
executive
summaries

Making
decisions to
WIN the
bussiness

Proactive and forward thinking.


Using analytic tools :
SWOT
Five Porter Forces
Value Chain
Or Else

The Porter's Five Forces Tool


Threat
Threatof
ofSubstitute
Substitute
Products
Productsor
or
Services
Services

Threat of
New
Entrance

Competitive
Rivalry
Bargaining
Bargaining
Power
Powerof
of
Suppliers
Suppliers

Bargaining
Power of
Buyers

The External Factor Evaluation


(EFE) Matrix
Key External Factors

Weight

Rating

Weighted Score

A. Opportunities
1. Indonesian population is growing 1.40% annually on 2010-2014

0.05

0.1

2. Almost throughout 2014, the level of the BI Rate at the level of 7.5%

0.06

0.12

3. Internet user penetration in Indonesia is 34.9% in 2014

0.07

0.21

4. 85% of the total Internet users in Indonesia access the Internet using a mobile phone

0.10

0.4

5. Indonesia is the largest smartphone sales market in Southeast Asia with a market
growth of 68% in 2014

0.08

0.24

6. Disposable income among citizens grew 5% in prior year

0.06

0.18

7. Telkomsel has the largest network coverage in Indonesia

0.15

0.6

7. Fluctuations in the exchange rate depreciation

0.1

0.4

8. Marketing campaign of competitor

0.07

0.21

9. Competitors have set a lower price for its products

0.12

0.36

10. The government has not set regulations related to OTT in Indonesia

0.06

0.12

11. The phenomenon of infrastructure sharing in Indonesia

0.08

0.24

B. Threats

1.00

3.18

Conclusion
The firms external environment is challenging and complex.
Because of the external environments effect on performance, the
firm must develop the skills required to identify opportunities and
threats existing in that environment.
The general environment has seven segments: demographic,
economic, political/legal, sociocultural, technological, global,and
physical. For each segment, the firm wants to determine the
strategic relevance of environmental changes and trends.
By studying The five forces model and EFE Matriks, the firm finds a
position in an industry where it can influence the forces in its favor
or where it can buffer itself from the power of the forces in order to
achieve strategic competitiveness and earn above-average returns.

Reference
[1]

Data Kependudukan, www.bps.go.id

[2]

Survey APJII Tahun 2014, https://apjii.or.id/

[3]

Laporan Tahunan Telkom, http://www.telkom.co.id/

[4]

Produk dan Daftar Tarif Telkomsel, www.telkomsel.com

[5]

Produk dan Daftar Tarif XL, www.xl.co.id

[6]

Produk dan Daftar Tarif Indosat Ooredoo, https://indosatooredoo.com/

[7]

Produk dan Daftar Tarif Smartfren, http://www.smartfren.com/

[8]

Siaran Pers NO.7/PIH/KOMINFO/2/2015 Tentang Kebijakan Penataan


Frekuensi Radio 1800 MHz, http://
www.postel.go.id/berita-penerbitan-surat-edaran-menteri-perihal-kebijaka
n-penataan-pita-frekuensi-r-26-2278

[9]

3G and 4G LTE Cell Coverage Map, www.opensignal.com

Reference
[10] Liebowitz, Jay. Strategic Intelligence Bussiness.
[11] Murphy, Christopher. Competitive Intelligence.
[12] David, Fred R. Strategic Management Concept and Cases.