Feasibility and Business Development Strategy of Sago Nursery by Company Y in Sago Plantation of Company X

Abstract

Indonesia has a variety of plants that produce carbohydrates, both derived from the grain and the rod such as sago and palm sugar. Seeing a great opportunity of sago utilization, Company X (X) developed sago plantation in peatlands located in Meranti District, Riau Province. X cooperates with Company Y (Y) to establish nursery and planting activities to meet the growing needs of the sago planting. This study aims to analyze financial feasibility and determine business development strategy of sago nursery by Y. Analytical methods used are: (1) Financial feasibility analysis through the Net Present Value (NPV), Payback Period (PBP), Internal Rate of Return (IRR), Profitability Index (PI) and Break Event Point (BEP), (2) Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis to determine strategy alternatives, and (3) Analytical Hierarchy Process (AHP) to determine the priority of selected strategies. The results of financial feasibility analysis shows calculated NPV (-Rp2.084.067.814) and PI (0.69), then the sago nursery business are considered not feasible. It will be considered to be feasible if Y made improvements in nursery and cultivation techniques to reduce the mortality rate or renegotiate the purchase price to X. Alternatives strategy that can be selected by Y is an intensive strategy, through product development. This is consistent with the analysis of Internal – External (IE) matrix that shows Y is in grow and build position. Priority business development strategy based on AHP is to 1) Increase production and decrease mortality rate (0.486), 2) Improve nursery and planting techniques (0.230), 3) Improve coordination and cooperation (0.150), and 4) Planting during the rainy season (0.134). Several advices have been proposed to Y are to 1) Perform technical improvements in nursery and planting to reduce mortality rate, 2) Renegotiate purchase price, and 3) Implement strategies that lead to product development by improvements in nursery and sago planting techniques.