THE CIPUTRA GROUP: SHAPING THE CITY IN ASIA “If you have the will, and the spiri

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THE CIPUTRA GROUP: SHAPING THE CITY IN ASIA
“If you have the will, and the spirit, and you have confidence, you follow up with forecast, all will happen.” Mr. Ciputra
Mr. Ciputra, founder of the Ciputra Group, looked back on his long career as one of Indonesia’s most prominent entrepreneurs. As a developer in the real estate sector, he had provided modern and comfortable spaces for millions of Indonesians to live, recreate, shop and work. Ciputra’s courage, vision and expertise led to extraordinary successes in the 1990s. But the Ciputra Group also went through a particularly difficult period during the Asian Crisis of 1998, a crisis that exposed the vulnerabilities of the Ciputra Group’sbusiness model. Ciputra had felt relieved when the last debt restructuring agreement was signed in 2005.
Yet, right at the moment when the Ciputra Group was gearing up for a new era of growth, a globaleconomic crisis struck in late 2008. Ciputra, who was now 77 years old and planning to retire, was againforced to reassess the Ciputra Group’s strategy. He thought about the appropriate balance between his
many ideas for innovative real estate projects and the level of risk the company could manage. Theongoing transfer of leadership toward his children and children-in-law also required his attention. Howcould the business continue the tradition of entrepreneurship while also building a professionally managed
family business group? The Ciputra family needed to work out a comprehensive strategy to prepare thefamily business for the next decades.

AWAKENING THE SPIRIT OF ENTREPRENEURSHIP
His father passed away in prison in 1943,when Ciputra was only 12 years old. Ciputra, then a fatherless child, was raised in poverty, but he was ableto continue his schooling after the war. After completing high school, he subsequently went to the famousInstitute of Technology Bandung (ITB) in Java, where he studied architecture. His career would be onethat showed, as he himself explained, his “spirit of entrepreneurship.”
Because the allowance he received from his mother during his university days was not sufficient, he startedhis first venture as a student in 1957. He established an architecture consulting agency with two friends,Budi Brasali (who passed away in 2006) and Ismail Sofyan. After graduating in 1960, Ciputra decided that,rather than working as a consultant for others, he wanted to implement his own ideas as a developer.
Ciputraworked and subsequently became the chief executive officer of Pembangunan Jaya, a developer partly ownedby the Jakarta provincial government, where he stayed for 35 years and worked closely with several ofJakarta’s former governors. In this capacity, he shaped Jakarta, including building or renovating severalprominent markets, a recreation park and various housing projects.
Aside from this job, he and his friends also established the Metropolitan Group after graduation, whereCiputra became the president commissioner, a non-executive role in which he actively provided guidanceand facilitated the development of this expanding group. Other investors, such as the Salim Group, werealso involved in a subsidiary of the Metropolitan Group, which developed the first privately built satellitecity of Jakarta. The group also had investments abroad. In 2009, his long-term partner, Ismail Sofyan, wasstill playing an active role within the Metropolitan Group.
In the 1980s, the three friends, who had hitherto shared their projects, decided that they could now starttheir own groups once their children grew up. So, when Ciputra’s children graduated and returned fromtheir university studies overseas, Ciputra started his own family group, the Ciputra Group, in which his
children, children-in-law, wife and brother were active. The new Ciputra Group was created for hischildren, whom he hoped would grow as professionals and continue his entrepreneurial spirit in theproperty sector.
Ciputra was considered the pioneer of the Indonesian property sector, and was often credited and awardedfor his visionary ideas. One of his achievements was to think big. He could see opportunities where otherscould not. In the late 960s, while heading Pembangunan Jaya, he transformed a swampland, infested with
mosquitoes and monkeys, intothe now popular Jakarta seaside,Taman Impian Jaya Ancol, re-positioning Jakarta as a beach city.According to Ciputra: “Every problem is an opportunity. The more difficult the problem, the moreopportunity: that is entrepreneurship.”
When his colleagues were thinking mere buildings, he was thinking new towns. The development of entiresatellite cities, or new towns, was a business model that became one of the trademarks of Ciputra, althoughit was gradually copied by other players in the market. His first project, while still with Pembangunan Jaya,was a project called Bintaro Jaya. Since the 1960s, Jakarta, like many other Asian cities, witnessed a largeinflux of people from the rural areas
While infrastructure was often officially the task of the government, the latter frequentlylacked the skills or budget to actually construct and maintain it. Especially after 1985, a period ofderegulation in Indonesia, the government warmed up to the idea of using the private sector to develophousing and public infrastructure. It was in this vacuum that Ciputra saw commercial opportunities.
With a keen eye for promising new business models, Ciputra moved into these large-scale propertyprojects, and provided middle- and upper-class citizens with living conditions that the government couldnot provide.
TheCiputra Group targeted the upper middle class for its large-scale property projects, and offered services andfacilities beyond what other areas offered, including healthcare, security, maintained roads and greenery.
Middle-class Indonesians were willing to pay for much more pleasant and convenient living conditions.
Internally, the company sought to stimulate an entrepreneurial spirit. All employees — from directors toadministrative staff — were encouraged to develop their sales qualities, and one executive spoke highly ofCiputra’ssecretary, who had already sold several apartments. The group held competitions betweendifferent project teams, and the winning project teams would go abroad on trips together. Ciputra explainedthat all project staff would be rewarded: “Yes, until servants and security people go there. All go there.
One group went to Paris — the Citra Garden team — they chose where they wanted to go. We gave theman extra bonus of 3-8 months.” Ciputra liked to involve staff at all levels in projects, and he regularlyinteracted with younger staff members and stimulated them to express their views. All employees lookedup to Ciputra, and several insiders remarked that “he is so outstanding.”
NEW GENERATIONS
Ciputra had four children: the eldest two were daughters, and the youngest two male twins. Because heconsidered them all talented, the eldest two daughters with their spouses (respectively, Rina CiputraSastrawinata and BudiarsaSastrawinata; and Junita Ciputra and Harun Hajadi) each led one division of the
Ciputra Group, while the twins (Cakra and Candra Ciputra) led another. Budiarsa focused on theinternational projects, including the new town in Vietnam, and had built contacts with officials in thatcountry. Harun, amongst others, ran several large projects in Surabaya, another large city in Indonesia. Thetwins were mainly active in commercial buildings like offices in Jakarta. Although the official structure ofthe group and its listed companies did not reflect this, informally the projects were divided amongst thechildren, who were engaged in subtle competition.There were differences in style between the children. An executive of the Ciputra Group commented that“Candra is only involved in the strategy, not in the daily operations. Harun is involved in everything, he ismore in the details. He also has an architect background, so he is also involved in the design. Budiarsa is inthe middle. Candra is more interested in the financial aspects, such as the stock market.” The division led
by Rina and Budiarsa had become reluctant to borrow after the crisis, and tried to avoid this at all costs,instead choosing to work with partners who provided financing and land. Harun, however, thought that thismight be too conservative, and took a slightly different approach. As such, within one company, there wasa diversity of managerial styles and project preferences. One of the insiders remarked: “Are the subholdingsgoing to go on their own or is it one person that will succeed Ciputra?
Now was a good time to plan the strategy for the firm and for the family and to strengthen the business forthe coming decades. Whereas the group had been designed along the way by the founder, as it grew larger,a more systematic view of the progress of both the business and the family in different stages could supportits future development.

1. Assume you are professional appointed as CEO of Ciputra Group :

a. How will you manage the group to be able to bring it to a better position in the real estate industry in Indonesia and overseas?

b. What kind of business situations you predict will happen to real estate industry in the coming 5 years

c. Write down your new vision for Ciputra Group (Where you will bring the company in the coming 5 years), strategy ( how to get there)

Explanation / Answer

a. To manage the group to be able to bring the company to a better position in real estate industry certain strategies can be developed and followed:

- increase in asset's value- In real estate market, properties are considered as capital assests for the company. Focus should be on managing and optimising the growth of these real estate properties. This can be done by looking for locations of the properties that will grow in in fast pace in future and investing in them, working on maximising the value of the portfolio of current porperty and considering to redevelop the obselete properties that the company had already invested in.

- Sales and marketing promotion- The properties should be marketed in the correct way. The value and location of property will decide the customers it will attract. marteking strategies have to be made accordingly by attracting customers of that category. The customers can include investors, stakeholders and normal citizens.

- Applying innovative ideas- identifying and creating innovation to apply in business planning and strategy is an essential tool for any business development. The same applies for the real estate industry. Though the scope of innovation here is less still insights can be provided as to type and workspace design is appropriate for a motivating working environment.

- focusing on employee satisfaction: employees are the backbone to the growth of any organization for better production, efficiency, good participation in business activities. Satisfying the employees will help in overall financial returns of the company.

- Flexibility- Being flexible on employee policies and property locations and prices will be a key factor to development of business. Real estate market faces ups and down in rates and demands. To enhance the financial growth of the company flexibility is an important aspect.

b. The changes that the real estate industry will face in 5 years ahead is an increasing trend. The real estate industry grow upto more than half from now. the markets emerging in the industry will form more of the activity of global construction. More risk and return policies can be expected from growing city infra-structure. Innovation in technology will take over more of the funcstions related to real estate industry making it easy to plan growth. Competion will increase with the expansion in the real estate market. goverment collaboration will be an essential part of the industry.

c. My focus will be to yeild improved business performance in the future through making strategic plans that are required for the company to make its position strong in the real estate market. I will focus on investing in assests that increase in value in the furture. Increasing in value depends on the location of the asset. A location which may not be attractive and market based in the current scenario can florish and give good returns in the future. A keen vision has to be made to study on such locations and investments have to be made accordingly. Attracting the customers to the properties owned by the company is another essential target for the company to grow. just buying the properties and waiting for the customers to indentify them will not give the desired results in time. Hence strategies will be made to advertise and market the properties to the right customers that may include investors, stakeholders and residential customers. After implementing plans on the area of investment and marketing the next area to be looked upon is the manpower management. the employees work as a team to enhance the company to achive their goals. So I wil focus on making strategies to satisfy employees for yeilding maximum results from them for the growth of the company.

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