OPTIMIZING PROFITABILITY AND SUSTAINABILITY IN PT

NAVTO’S B2B BUSINESS: A STRATEGIC APPROACH

FINAL PROJECT

In partial fulfilment of the requirements for

the master’s degree
from Institut Teknologi Bandung

By
IVAN ABDURROSYID ALANA P A.
Student ID: 29322056
(Master of Business Administration Program)

INSTITUT TEKNOLOGI BANDUNG

July 2023
 CHAPTER I
INTRODUCTION

1.1 Background
Water is an essential natural resource that supports life on our planet. It
encompasses approximately 70% of the Earth's surface, primarily in the form of oceans
and seas. However, only a small fraction, approximately 2.5%, of this water is freshwater
suitable for human consumption and use. Freshwater exists in various forms, including
surface water such as rivers, lakes, and reservoirs, as well as groundwater stored beneath
the Earth's surface. Water is indispensable for the existence of humans and other living
organisms, and without it, survival would be unlikely. Similarly, industries heavily rely
on water for their production processes, as it is essential for the creation of their intended
final products. Throughout history, from the first Industrial Revolution in the 18th
century to the present digital era, water has played a critical role in ensuring continuous
production while maintaining high product quality.
Recognizing the significance of water in industries and the need for sustainable
production, water treatment companies have emerged worldwide. These companies
combine scientific knowledge and advanced technology to offer solutions to factories and
industries seeking to achieve water production of the highest quality, safety, and
reliability.
In general, plant factories use water for two primary purposes: utility and
production. Prior to the establishment of water treatment companies, factories and
industries often encountered issues with their equipment that involved water as a treated
substance. Such problems, including corrosion, scaling, leakage, and, in severe cases,
equipment damage and cracking, would adversely affect equipment performance and lead
to a decline in productivity. Consequently, companies would experience revenue loss due
to reduced production output. Recognizing this opportunity, water treatment pioneers
developed chemical products and equipment solutions to help factories restore their
production levels by eliminating water-related issues. Today, the majority of industrial
factories rely on water treatment companies to mitigate water-related problems, ensuring
high productivity levels are consistently achieved.
1.1.1 Indonesia’s Water Supply and Demand
According to the United States Geological Survey (2019), our planet, Earth, is
predominantly covered by water, with 71% of its surface consisting of water. Out of
this water, 96.5% is seawater with high salinity, leaving only 3.5% as fresh water.
This small percentage of fresh water is available for various purposes, including
drinking water and industrial use. Within this limited amount, 70% is used for
agricultural irrigation, which often involves inefficient water usage. Individuals
utilize 10% of the fresh water, while the industry consumes 20%. It has been found
that a significant amount of water is wasted due to leaking pipes (Nasdaq, 2021).
Although the percentage may seem small, industries are recognized as the second-
largest consumer of freshwater globally. For Indonesia, being a maritime country
with a significant ocean coverage (62% of its sovereign area), it has the potential to
supply water to meet its domestic needs and those of neighboring countries. Radhika
et al. (2017) reported that Indonesia has an annual availability of approximately 2.78
trillion cubic meters of surface water (freshwater) to meet the demands of its 276
million population. The detailed water availability for each area in Indonesia is
presented in table below,
No Average Water Availability
Area Total Area (Km2)
. (million m3 /year)
1 Java 132,698.13 175,558.45
2 Sumatera 472,849.20 726,148.65
3 Kalimantan 534,912.03 792,376.30
4 Sulawesi 185,150.03 204,043.92
5 Bali and Nusa 71,718.55 35,985.47
Tenggara
6 Maluku 78,378.79 81,212.08
7 Papua 412,738.35 767,903.51
8 Indonesia 1,888,445.12 2,783,228.38
 According to the information provided in table, water in Indonesia is treated and
distributed to customers throughout the country as a source of clean water. The
entities responsible for this task are known as water supply establishments. These
establishments can be government-owned and operated companies, such as
Perusahaan Air Minum, Perusahaan Dagang Air Minum, or Badan Pengelola Air
Minum, as well as private or foreign-invested companies. In 2020, Indonesia's
Central Bureau of Statistics reported that there were 543 water supply establishments
operating across the country. These establishments collectively produced a total of
5,262.1 million cubic meters of clean water. Further analysis of the statistical data
reveals that 456.3 million cubic meters of clean water were distributed to 922,712
commercial and industrial customers.
No
Customer Group Number of Customer Water Distributed (Million m3)
.
1 Social 204,803 97.9
2 Special 36,323 163.6
3 Commercial and 922,712 456.3
Industry
4 Non-Commercial 14,182,154 2,917.7
5 Others - 715.2

1.1.2 Water Treatment Industry

Water treatment companies generate revenue by offering comprehensive solutions
tailored to their clients' specific needs. These companies often specialize in particular
areas based on their expertise. For instance, one water treatment company may
specialize in designing and constructing complete water treatment plants, while
another may focus on operating and maintaining existing plants on behalf of the
customers (known as O&M services). Additionally, some companies provide
solutions centered around equipment and chemical technologies, offering complete
water treatment programs as contracted services. The business model typically
involves entering into contractual agreements with clients to deliver these services.
 Chemical manufacturer-specified companies in the water treatment industry often
segment their market based on the types and functions of the chemicals they offer or
by the specific applications their solutions are designed for. Chemicals can be broadly
categorized into two main groups: commodity chemicals and specialty chemicals.
Each of these categories has its own distinct market, and the target customers are
typically different.
Commodity chemicals refer to widely available and commonly used chemicals
that are produced in large quantities. These chemicals, such as chlorine, alum, and
sodium hydroxide, serve fundamental functions in water treatment processes and are
typically used in large-scale applications. The market for commodity chemicals tends
to focus on water treatment facilities, municipalities, and industrial plants with high
water usage.
On the other hand, specialty chemicals are more customize and specific in their
applications. These chemicals are designed to address unique challenges or
requirements in water treatment. Examples of specialty chemicals include corrosion
inhibitors, scale inhibitors, coagulants, and flocculants. The market for specialty
chemicals in water treatment may target specific industries or sectors with specialized
needs, such as oil and gas, power generation, pharmaceuticals, or food and beverage.

1.2 Company Profile

PT Navto Deltachem Indonesia establish in 2018, a company primarily engaged
in the production and distributing of chemicals for water treatment and industrial
processes. We are also involved in the field of Engineering Building, which includes
MEP (Mechanical, Electrical, and Plumbing) works. The company was established when
a group of experts in their respective fields, who had previously worked for leading
chemical and engineering companies in the water treatment and industrial processes
sectors, joined PT Navto Deltachem Indonesia. This enables our company to provide top-
class services for a wide range of applications in various industries. The business has
demonstrated rapid and significant growth in a short period of time through alliances with
multinational and local partners to enhance our products and services, making the
company that is always focused on the development of the latest technologies. At the
same time, we continuously develop solutions that meet the needs of our customers.
PT Navto Deltachem Indonesia manufactures and supplies various chemicals,
providing solutions and services for industrial applications. PT Navto Deltachem
Indonesia also involved in Engineering Building. With company’s expertise, provide the
right solutions for customers. All customers need to do is inform us about their problems
and requirements, and give us the opportunity to solve them.
Chemical Treatment Program are follow,
- Boiler Water Treatment
- Cooling Water Treatment
- Water and Wastewater Treatment
- Laboratory Equipment and Reagent
- Raw Water Management, such as filtration system, etc
Chemical Cleaning Program are follow,
- Steam Boiler
- Heat Exchangers
- Tanks and Pipes
- Cooling Towers and Chillers
- Air Conditioners, FCUs, AHUs
- Metals and Othe Equipments
Engineering Services are follow,
- Operation and Maintanance
- Installation and Reconditioning of Steam Boilers and Oil Heaters
- Installation and Reconditioning of Cooling Towers
- Design and Construction of Process Water Treatment and Wastewater
Treatment Systems
- Chemicals or Mechanicals Cleaning
- Maintenance of Cooling Towers, Chillers, AHUs, FCUs, etc
Value added of PT Navto Deltachem Indonesia will design chemical programs for
water and energy treatment that are made to the customer’s operations. Not only sell
chemicals but also provide after sales support, including, customer visits, service
 supports, providing comprehensive solutions for assigned projects, conducting training
for operators, supervisors, and factory staff, industrial seminars, research and
development. The representative from company will assist customers in optimizing costs,
improving performance, enhancing productivity, and, most importantly, increasing
profitability for the customers.
Here's the Organization Structur of PT Navto Deltachem Indonesia,

1.3 Business Issue

PT Navto, a water treatment company that specializes in manufacturing and
providing chemical products and services, faces strong competition from other companies
in the industry. This competition is not only driven by multinational corporations but also
by local companies that are expanding their market share to attract customers.
Despite the intense competition, PT Navto has identified a significant business
issue affecting its operations: low profitability. The main factors contributing to this
problem are high expenses, specifically the cost of goods sold and operating expenses.
Actual data needs to be inputted to accurately determine these expenses.
The cost of goods sold is the primary expense for PT Navto, mainly due to the
purchase of raw materials, including energy costs and variable production expenses. On
average, the cost of goods sold accounts for approximately 50% of the company's total
annual expenses. This factor can be identified as an early indicator of the company's low
profitability, influenced by various variables.
 Furthermore, PT Navto's chemical sales largely consist of generic products, which
are also sold by competitors. For instance, past sales data reveals that apart from specialty
products like cooling tower and boiler chemicals, the second and third most sold products
are coagulant and flocculant and commodity products such as sulfuric acid, hydrochloric
acid, and caustic soda. These products lack a competitive advantage as they are widely
produced and sold by other companies, without requiring advanced technology for
production.
Although these generic products contribute significantly to the sales value, their
profitability is weaker compared to other products. One reason for this is the prevalence
of price wars among water treatment companies. Since most companies produce and sell
commodity products and coagulant & flocculant, they engage in a price competition,
offering the products at the lowest prices possible to attract customers. This cost-focused
strategy leads to minimal profit margins. PT Navto, following suit, has also joined the
price war by offering lower prices for these products, resulting in reduced profits
compared to other product lines.
Additionally, the profitability of selling commodity products is hindered by the
increasing trend in prices for these chemicals over the past decade. Data collected from
various commodity providers demonstrates how the prices of these chemical products
have been rising, while PT Navto is simultaneously pressured to offer lower prices in the
competitive market. The combination of price increases and price wars significantly
contributes to the company's lower profitability.

1.3.1 Cause-Effect Analysis

The technique of cause and effect analysis involves constructing a diagram to
assess the underlying causes of a problem or situation. This diagram facilitates an
examination of the reasons behind an event or its potential occurrence by
categorizing the possible causes into smaller groups. The primary objective of this
analysis is to pinpoint the causes that can be traced back to a particular outcome,
identify the fundamental reasons behind the problem, and assist in generating
effective solutions and strategies for resolving it.
 Based on the cause-effect diagram above, apart from other contributing factors,
the company's profitability would face challenges if PT Navto continues to pursue a
cost leadership strategy. There are two significant factors influencing this situation:
the rising costs of raw materials and the inevitable price competition with rivals in
the market for selling commodity products. Unless PT Navto explores alternative
solutions to address this issue, the anticipated outcome of diminished profitability
cannot be avoided. Consequently, it becomes imperative for the company to
proactively seek alternative strategies in order to improve the current condition,
thereby enhancing both the overall situation and the desired profitability goals.

1.4 Research Question and Research Objectives

With explained in business issue before, this research thesis is made to answer
certain objectives from PT Navto Deltachem Indonesia are follow,
- To identify company’s resources and capabilities to grab the opportunity in
market
- To identify customer’s criteria, perception, and motivation to decide their
water treatment chemicals provider
- To identify points of products that are beneficial for customer
- To provide a brief recommendation of business strategy to improve
company’s revenue, profitability
The exploration takes place by designing the research question are follow,
 - What are the resources and capabilities within the company to grab the
opportunity in market and enhance profitability?
- What are customer’s criteria, perception, and motivation to decide their water
treatment chemicals provider?
- What are the key points of products that are beneficial for customer (unique
value)?
- What kind of brief business strategy should be recommended to improve the
revenue and profitability for the company?

1.5 Research Scope and Limitation and Brief Writing Structure

This research focuses solely on identifying an effective business strategy for
maximizing the company's profit. It specifically delves into the water treatment industry,
which generates revenue through chemical manufacturing and related services, including
its customer base. The chosen industry for the research is process industry sector, as it
holds significant importance for the company due to its substantial customer base and
being one of the primary sources of sales. While financial issues are not extensively
discussed, they are used as supplementary information to gain a better understanding of
the company's overall condition.
Furthermore, this project comprises five chapters that cover the following topics
and provide an overview of each chapter's contents:
1. Chapter I, Introduction
2. Chapter II, Literature Review
3. Chapter III, Research Methodology
4. Chapter IV, Results and Discussion
5. Chapter V, Conclusion and Recommendation
 CHAPTER II
LITERATURE REVIEW

2.1 Theoretical Foundation

Related to the research questions in Chapter I and in order to achieve the
objectives, the literature review is compiled to find out the best solution to propose the
business strategy. In this chapter, the primary objective is to explore previous studies
conducted by other researchers and utilize them as references. The theories and concepts
derived from these references will be further developed into a conceptual framework for
this research. This framework will serve as the foundation for designing the research as a
whole.

2.1.1 B2B Business

Relationship marketing is a strategic approach that emphasizes the significance of
establishing and nurturing long-term relationships with customers. In the B2B
context, relationship marketing takes on added importance as it focuses on developing
mutually beneficial partnerships and fostering trust between businesses. This
approach recognizes that B2B transactions involve complex and ongoing interactions,
and it seeks to build strong connections that go beyond individual transactions. The
commitment-trust theory of relationship marketing, as proposed by Morgan and Hunt
(2020), suggests that building trust and commitment between businesses is crucial for
successful relationship marketing efforts. By focusing on relationship-building and
cultivating trust, B2B companies can enhance customer loyalty, foster collaboration,
and achieve mutual long-term benefits.
Transaction cost economics is a theoretical framework that focuses on
understanding the costs involved in conducting transactions in the market. In the
context of B2B business, this theory emphasizes the significance of analyzing
transaction costs and selecting the most efficient and cost-effective governance
structure for business relationships. Transaction costs include the expenses incurred in
searching for suppliers or partners, negotiating and monitoring contracts, and
resolving disputes. According to Williamson (2020), the governance of contractual
relations plays a crucial role in managing transaction costs. Companies can choose
from various governance structures, such as contracts or vertical integration, to
minimize transaction costs and optimize the efficiency of their business relationships.
By carefully analyzing transaction costs and selecting appropriate governance
structures, B2B companies can enhance operational efficiency, mitigate risks, and
improve overall performance.
The resource-based view is a theoretical perspective that highlights the
significance of unique and valuable resources and capabilities in gaining a
competitive advantage. In the B2B context, this theory suggests that companies
should focus on developing and leveraging their distinctive resources and capabilities
to create value for their business customers. Resources can include tangible assets,
intellectual property, specialized knowledge, organizational culture, or customer
relationships. The resource-based view asserts that sustainable competitive advantage
arises from the ability of a company to accumulate and deploy these resources
effectively, in ways that are difficult for competitors to imitate or substitute. By
identifying their unique resources and leveraging them to create value for B2B
customers, companies can establish a strong market position, enhance customer
loyalty, and achieve long-term success. The study by Barney (2020) titled "Firm
resources and sustained competitive advantage" provides key insights into the
resource-based view and its implications for achieving competitive advantage in the
B2B context.
The customer value proposition is a theoretical concept that centers around
comprehending and providing unique value to customers. In the B2B business
context, this theory emphasizes the significance of developing a compelling value
proposition that specifically addresses the needs and challenges of business
customers. Understanding what customers value and creating offerings to meet those
needs is crucial for B2B success. By identifying and delivering value that is
distinctive and aligns with the specific requirements of business customers,
companies can differentiate themselves from competitors, enhance customer
satisfaction, and foster long-term relationships. Anderson and Narus (2020) explore
this concept in their article titled "Business marketing: Understand what customers
 value," published in the Harvard Business Review. Their research sheds light on the
importance of customer value and provides insights into how B2B companies can
create and communicate value propositions that resonate with their target customers.
The customer value proposition theory emphasizes the importance of
understanding and delivering unique value to customers, particularly in the context of
B2B business. This theory highlights the significance of developing a compelling
value proposition that specifically addresses the specific needs and challenges of
business customers. B2B companies must thoroughly comprehend what their
customers value and tailor their offerings accordingly. By doing so, companies can
differentiate themselves from competitors, enhance customer satisfaction, and foster
long-term relationships. Anderson and Narus (2020) delve into this theory in their
article titled "Business marketing: Understand what customers value," which was
published in the Harvard Business Review. The research presented in the article
provides insights into the importance of customer value and offers guidance on how
B2B companies can effectively create and communicate value propositions that
resonate with their target customers.
The concept of buyer-seller relationships focuses on understanding the dynamics,
interactions, and mutual dependencies between buyers and sellers in the B2B context.
It highlights the importance of trust, cooperation, and effective communication in
building successful long-term relationships. B2B transactions are often characterized
by ongoing partnerships and collaborations that extend beyond individual
transactions. Building and nurturing strong buyer-seller relationships are critical for
achieving mutual benefits and sustained business success. Trust serves as a
foundation for these relationships, fostering cooperation, open communication, and
shared value creation. The study by Dwyer, Schurr, and Oh (2020) titled "Developing
buyer-seller relationships," published in the Journal of Marketing, explores the
significance of buyer-seller relationships and provides insights into strategies for
building and maintaining successful long-term relationships in the B2B context.

2.1.2 Competitive Strategy

 Business competition is an unavoidable aspect as companies continually strive to
grow and achieve their goals. Failing to adapt to market changes and losing market
share can result in reduced revenue and profits for companies. In order to foster
growth, companies need to establish a business strategy that aligns with their internal
structure and enables them to succeed in the competitive market. One approach is the
use of competitive strategy, which Porter (1985) defines as a plan to establish a
profitable and lasting position amidst industry rivalry by seeking a favorable
competitive stance within the primary arena of competition.
Competitive strategy necessitates the pursuit of a competitive advantage, which
refers to the ability to offer greater economic value to customers compared to rival
companies. Porter (1985) asserts that a firm's capacity to deliver value exceeding the
associated costs is the foundation for developing a competitive advantage. It is
crucial for a company to ensure that the created value remains exclusive to them and
cannot be easily replicated by competitors. Additionally, Grant (2016) suggests two
categories of competitive advantage: cost and differentiation. Cost advantage focuses
on becoming the market's cost leader by offering a standardized product, while
differentiation advantage aims to provide unique and valuable offerings instead of
solely relying on low-priced products.
Barney (1991) proposes that sustainable competitive advantage, also known as
sustained competitive advantage, can be achieved when a company's resources meet
four key criteria. Firstly, the resources must have value in leveraging opportunities or
neutralizing threats in the company's environment. Secondly, these resources should
be rare among competitors. Thirdly, they must be difficult to imitate perfectly.
Lastly, the resources should be irreplaceable, adding significant value to the
company. Evaluating a company's resources against these criteria helps determine
whether sustained competitive advantage can be attained or if additional steps are
necessary to acquire external resources.

2.1.3 Porter 5 Forces

The Porter's Five Forces framework, developed by Michael Porter, is a widely
used tool for analyzing the competitive forces within an industry. It helps assess the
attractiveness and profitability of an industry by examining the balance of power
among five key forces. Here is an overview of the five forces (Porter, 1980).

Threat of New Entrants, this force measures the ease with which new competitors
can enter an industry. Factors such as barriers to entry, economies of scale, capital
requirements, access to distribution channels, and government regulations determine
the level of threat. Higher barriers and significant capital requirements can
discourage new entrants, leading to lower competition and potentially higher
profitability for existing players.
Bargaining Power of Suppliers, this force refers to the suppliers' ability to
influence pricing, terms, and supply in an industry. Suppliers' power increases when
there are limited alternative suppliers, unique resources, or differentiated products.
Additionally, suppliers can exert influence if they have strong brand recognition or if
they offer critical inputs that are not easily substitutable. Strong supplier power can
reduce industry profitability as suppliers demand higher prices or better terms.
Bargaining Power of Buyers, the bargaining power of buyers refers to the ability
of customers to influence pricing and terms. When buyers have numerous choices,
low switching costs, or the ability to produce inputs internally, they gain power over
the industry. Buyers' power increases competition and can lead to price pressure and
reduced profitability for firms within the industry.
 Threat of Substitute Products or Services, this force considers the availability of
alternative products or services that can fulfill the same customer needs. If there are
many substitutes available, the industry faces a higher threat. The presence of
substitutes limits the pricing power and profitability of firms within the industry. The
threat of substitutes is higher when they offer comparable quality, functionality, and
lower prices.
Intensity of Competitive Rivalry, this force assesses the level of competition
among existing firms within the industry. Factors such as the number of competitors,
industry growth rate, product differentiation, and exit barriers influence competitive
rivalry. High rivalry results in price competition, increased marketing efforts, and
potential erosion of profitability.

2.1.4 Ansoff Matrix

The Ansoff Matrix, proposed by Igor Ansoff, provides a framework for strategic
decision-making by considering different growth strategies. These theoretical
foundations help organizations assess their options for growth and expansion,
enabling them to make informed choices about market penetration, market
development, product development, and diversification strategies (Ansoff,1957).
Market penetration, as a strategic direction within the Ansoff Matrix, involves
selling existing products or services to existing markets with the goal of increasing
market share. This strategy focuses on leveraging the organization's current offerings
and expanding its presence within its current customer base. Tactics such as
promotional campaigns, pricing strategies, and customer retention efforts are
employed to capture a larger share of the market. Market penetration seeks to drive
growth by attracting customers from competitors or by increasing the frequency and
volume of purchases from existing customers.
Market development, as a strategic direction within the Ansoff Matrix, involves
introducing existing products or services to new markets. This strategy focuses on
expanding the organization's customer base by identifying and entering new
geographical areas, target customer segments, or distribution channels. By venturing
into untapped markets, organizations can increase their reach and capitalize on new
 business opportunities. Market development requires market research, understanding
the needs and preferences of the new target market, and adapting marketing and
distribution strategies accordingly. It allows organizations to leverage their existing
products or services while expanding their customer base beyond their current
markets.
Product development, as a strategic direction within the Ansoff Matrix, focuses on
creating and offering new products or services to existing markets. This strategy
emphasizes innovation and research and development (R&D) efforts to meet
evolving customer needs and preferences. By introducing new and improved
offerings, organizations aim to enhance their competitiveness, attract new customers,
and increase sales within their current market segments. Product development
involves identifying customer demands, conducting market research, and investing in
R&D to develop and launch new products or services that align with customer
expectations. This strategic approach allows organizations to leverage their existing
customer base while expanding their product portfolio.
Diversification, as a strategic direction within the Ansoff Matrix, involves
entering new markets with new products or services. This strategy aims to expand
beyond existing offerings and target new customer segments or industries.
Diversification allows organizations to explore new business opportunities and
reduce dependence on a single market or product. It involves venturing into
unfamiliar territory and may require significant investment, market research, and
adaptation of the business model to suit the new market. Diversification can be either
related (entering a new market that is related to the existing business) or unrelated
(entering a completely different market).

2.1.5 BCG Matrix

Based on Henderson, 1970. The BCG Matrix is a strategic tool that helps
businesses analyze and manage their portfolio of business units or products. It
provides a visual representation of the relative market share and market growth rate
of each unit/product, allowing companies to make informed decisions about resource
allocation and strategic priorities. The matrix categorizes business units/products into
four quadrants: Stars, Cash Cows, Question Marks (Problem Children), and Dogs.
The BCG Matrix helps businesses evaluate the performance and potential of their
portfolio and make strategic decisions accordingly. It encourages a balanced
approach to resource allocation, ensuring that investments are directed toward high-
growth opportunities while managing and extracting value from mature markets. By
strategically managing their portfolio using the BCG Matrix, companies can optimize
their growth prospects, profitability, and overall competitiveness.
1. Stars
Stars represent business units/products with high market growth and a high
relative market share. These units have strong growth potential and generate
substantial revenue. Companies should invest in stars to maintain their market
position and capture future growth opportunities.
2. Cash Cows
Cash cows are business units/products with a high relative market share in a
mature or slow-growth market. These units generate significant cash flow and
profit margins. Companies should manage cash cows to sustain their
profitability and use the generated cash to support other units/products within
the portfolio.
3. Question Marks (Problem Children)
Question marks are business units/products with high market growth but a low
relative market share. These units require further analysis to determine their
potential. Companies should assess whether to invest in question marks to
convert them into stars or divest them if they are unlikely to achieve a
sustainable market position.
4. Dogs
Dogs represent business units/products with low market growth and a low
relative market share. These units have limited growth potential and may
generate minimal profit or even losses. Companies should consider divesting
or restructuring dogs to focus resources on more promising units/products.
2.2 Conceptual Framework
As stated by Smyth (2004), conceptual frameworks consist of a collection of key
ideas and theories that assist in accurately identifying a problem, framing research
questions, and selecting relevant literature. In academic research, a conceptual framework
is commonly employed as a starting point, as it helps researchers define their objectives
and research questions effectively.
A conceptual framework serves as a guiding tool for researchers in their
investigations. Its functions encompass various aspects such as justifying the importance
of a topic, providing a foundation for exploring the topic within different contexts
(theoretical and practical), shaping the formulation and refinement of research questions,
facilitating the selection of appropriate theories and methodologies that align with the
topic, ensuring rigor in the research process, and offering researchers a framework to
evaluate their social identity and position as the researcher (Ravitch & Carl, 2021).
Conceptual framework is then designed to find suitable and proper business
strategy for PT Navto Deltachem Indonesia referred to the issue. The framework is
shown below.
External Analysis Internal Analysis
Porter 5 Forces Ansoff Matrix
BCG Matrix

Business Issue
Analysis
Market Understanding
Competition Scanning
Consumer Analysis

Business Strategy
Formulation
Product Pricing
Go-to Market

Business Strategy
Solution and
Recommendation