Indonesia: Current Cultural State
Indonesia is a country in Southeast Asia located between the Indian and Pacific Oceans. There is nothing ordinary about Indonesia: it is the world’s largest island state, the fourth-most populous country housing more than 261 million people, and the largest Muslim nation. The archipelago consists of more than seventeen thousand islands, and in regards to sea and land combined, Indonesia is the world’s seventh biggest country. Indonesia’s top five largest and economically important islands include Kalimantan, Sulawesi, Papua New Guinea, Java, and Sumatra. Each region boasts its own unique culture, customs, and traditions – some of the islands are even home to different races. Indonesia capitalizes on diversity and sees it as something that unites the nation.
The country’s modern mentality took origins in its recent history when Indonesians had to take a stand in the face of colonization and exploitation. The history of the Indonesian archipelago has been shaped by the presence and influence of foreign powers that were drawn to the region due to its rich natural resources. Dutch conquest and expansion resulted in numerous collateral damages. After an armed and diplomatic conflict with the Netherlands, in 1949, Indonesia became an independent state (Legêne, Purwanto, & Nordholt, 2015). Since then, the country has been enjoying autonomy and working hard for a brighter future. In 2005, the government passed the National Medium Term Development Plan 2005-2005 one of the main objectives of which is development and self-reliance. The country’s new leaders emphasize the importance of science and new technologies as well as infrastructure development and active foreign policy (Indonesia Investments, n.d.). Thus, collaborating with US-based global travel technology company Expedia would be in line with Indonesia’s vision.
A number of key demographic trends will shape the interests of the Indonesian customer base and justify the choice of the country as the next Expedia affiliate. First, the country has been successfully combating poverty: in 2018, the poverty rate was at an all-time low at 9.8% – slight but tangible progress from 10.1% in 2017 (Indonesia Investments, 2018a). According to the predictions made by Boston Consulting Group, the number of citizens belonging to the so-called middle class and affluent customers (MAC) will double by 2020 (Boediono, 2017). As of 2014, the said demographic population was at 74 million, and it is projected that each year 7 to 8 million Indonesians will be entering MAC. The country’s citizens are as optimistic about the future as ever: they can now afford to treat themselves to nice things after covering basic expenses. The rising trend is backed up by hard data: each year, more and more Indonesians apply for a foreign passport. For instance, in 2016, 3 million citizens made a request whereas, in 2017, the number was up to 3.2 million (Indonesia Investments, 2018b). They are interested in traveling abroad, and it’s about time for global travel technology companies to make their move.
Customer & Traditions
Indonesians are a traveling nation, ready to explore the whole world. In recent years, their travel destinations have not been only confined to their home islands. Experts report that a country experiences a boom in the popularity of foreign travel. Most Indonesians prefer Singapore, and the wealthiest of them even treat themselves to few-hour shop tours. Other attractive destinations include neighboring countries such as Malaysia and Thailand. Hong Kong, China, Japan, and South Korea are also popular with more affluent demographics.
There are four reasons why Indonesians started to travel more. First, over the last ten years, travel agents have been offering them more affordable holiday plans. Second, as a Muslim-majority nation, it is not uncommon for Indonesians to go on an Islamic pilgrimage to Mecca, Saudi Arabia, which can be done throughout the entire year. Third, nowadays, many Indonesians work and study abroad, and the global Indonesian diaspora is estimated at 8 million. It is natural for Indonesian ex-pats to want to invite their friends and family. Fourth, the rising middle class is bridging the gap between the country’s richest and poorest. The average Indonesian’s purchasing power is increasing, which turns traveling from luxury to something that many can plan regularly and afford without draining the budget.
Cultural Implications
The three pillars of any Asian business culture are respect for seniority and authority, maintenance of hierarchical structures, and the strife toward the preservation of harmony. In this regard, Indonesia can hardly be seen as an exception. Even though the country is trying to adopt more modern business models, the legacy of the past nepotism and corruption still push businessmen and businesswomen to uphold traditions even when they do not benefit them. Indonesians have somewhat rigid concepts of acceptable behavior in business which might seem outlandish to Expedia’s representatives.
To better understand the business culture in Indonesia, it is critical to examine two concepts: high-context and low-context cultures. Low-context cultures are the US, UK, Germany, and Scandinavian countries: their citizens prefer open dialogue and honest reactions. They appreciate clear instructions and overt criticism when a situation calls for it. Indonesia and other Asian countries are high-context: the majority of rules that one should stick to are unspoken. A lot of information is implied, and the participants of a business process have to rely heavily on intuition and their ability to read signs such as gestures and intonation. Expedia’s representatives might want to take a crash course in doing business in Asia to save face and be more effective negotiators.
US managers should understand the value that Indonesians put on personal relationships in business. Before presenting their offer, the representatives would have to go through a series of greeting rituals and other pleasantries. If some subordinates are present in a meeting, they should not be addressed individually. A special treatment might result in embarrassment in case they do not know the answer, and losing face is one of the biggest fear for the average Indonesian.
Language Barrier
The global spread of the English language and its cultural and linguistic dominance have affected Indonesia. As of now, for many Indonesians good command of English is tied to their social standing. They are aware that to make it in life, they have to work hard on their language skills and pronunciation. The government is concerned with the growing tendency: for many families belonging to the middle and upper-middle classes, Bahasa Indonesian has become a second-class language. These families want a brighter future for their children and choose prestigious private schools where the majority of the subjects are taught in English over ordinary public schools. Since the middle class is an actively growing demographic, it is expected that more and more Indonesians will be learning English, making it easier for foreign companies to collaborate with them and market their products toward potential customers.
However, as the statistics have shown, the fuller picture of English proficiency in Indonesia leaves a lot to be desired. In 2017, Indonesia was ranked 39th out of 80 countries in the English First Proficiency Index (Valentina, 2017). The country has been showing stagnating results for the last few years, lagging well behind its neighbors – Singapore, Malaysia, and the Philippines. Until Indonesia tackles understaffed rural schools and incomplete curriculums, foreign businesses and investors are likely to face language barriers when talking to Indonesians. In case Expedia decides to collaborate with Indonesia, the representatives will have to resort to hiring a professional interpreter for negotiations. Another problem related to English proficiency issues in Indonesia is the necessity to make an adaptation of the original website to meet the locals’ needs. The situation might be aggravated by the fact that apart from the official language, Indonesian, the archipelago is home to more than 700 other languages. Translators and web developers might consider creating different versions of the platform for at least the five most widespread languages to reach out to broader audiences.
Assessment of the Region
In recent years, Indonesia has made tangible progress and enhanced its business environment. The experts behind the world’s most comprehensive ranking Doing Business announced that by 2018, the country had jumped nineteen places from the 91st to 72d (Amianti & Gorbiano, 2017). The report revealed that Indonesia deregulated its economy and made starting a business and collaborating with foreign companies easier than ever. However, it still lags behind its more “successful” neighbors – Thailand, Malaysia, and Vietnam that took 26th, 24th, and 68th places respectively.
What apparently contributed to the country’s economic growth and attractivity for foreign businesses is its booming tourist industry. According to recent statistics, each month, more than 1.1 million tourists visit the Southeast Asian country with the number reaching 1.6 during the high season from July to August. It is projected that each year, tourist arrivals will be increasing by 6.2% (Trading Economics, 2019). The country welcomes the most visitors from neighboring Malaysia, China, Singapore, and Timor-Leste as well as from Australia, India, and Japan. The country is not only an attractive destination itself but also an important traveling hub in Southeast Asia. Its international airports allow those who would like to expand their scope of touristic exploration to reach many other Asian countries.
SWOT Analysis
Expedia is a global company that has been on the market for more than twenty years. Rich experience and the history of success are its main strengths: throughout the years, the company has been collaborating with as many as thirty countries and acquiring its local travel agents, management companies, and rental services. With its brilliant team of managers and growing revenue, Expedia has resources galore at its disposal and can come up with an effective plan to tap into the Indonesian travel industry.
It is imperative that the company takes advantage of what Indonesia has to offer. The country’s population has been growing more mobile and open to the idea of traveling abroad over the last decade. As the economic growth and the ease of doing business are beating expectations, Indonesians are becoming optimistic about their prospects. Further, Indonesia is Southeast Asia’s largest online market: as of now, more than 104 million Indonesians use the Internet regularly. It is projected that by 2023, more than 150 million citizens will have Internet access, which means more potential customers for web-based services (Statista, 2017). Collaborating with Indonesia will create more opportunities for both Indonesians who would like to go abroad and foreigners who dream of visiting this magnificent country.
The weaknesses of the new campaign are not to be dismissed. First, despite the experience in collaborating with foreign partners, Expedia has not worked much with Southeast Asian countries. The strategies that proved to be workable for European countries might not be appropriate for Asia. Moreover, Expedia might not find a person on its team who specializes in Asia and is knowledgeable about its business culture. In Indonesia, Expedia might be confronted with such threats as the presence of local competitors and distrust for a foreign company. As of now, Indonesia boasts tens of domestic travel agencies which have already gained support and built a loyal customer base.
Four P’s of Marketing
The end product of collaboration is a website platform that takes after the official one. It is an elaborate travel aggregator that would help both Indonesians and foreign tourists to book hotels, rental cars, and buy full package holiday plans. Since the platform needs to appease Indonesians, it might offer them special deals: for example, trips with a focus on Islamic legacy and religious places. In the long run, Expedia can try to collaborate with local travel agencies to get access to their customer base. The platform is online; however, Expedia should consider opening offices in Indonesia’s largest cities where bilingual assistants would be helping customers with choosing a good tour. A pricing strategy that the company might want to entertain is a discount for all new members: for example, 5% off the first purchase. In the long perspective, Expedia could introduce loyalty programs and bonuses. As for promotion, Expedia’s web development team should focus on search engine optimization (SEO) and targeted advertising that would take into account both a person’s geographical location and search engine requests.
Conclusions
As more and more Indonesians enter the middle and upper-middle classes, traveling becomes something enjoyable and affordable on a regular basis. Expedia, a global travel technology giant, has a history of expansion and collaboration with other countries, and it might be time to branch out and explore what Indonesia has to offer. Indonesians like visiting neighboring countries, going on Islamic pilgrimages, and organizing reunions with their ex-pat friends and relatives. Foreigners appreciate Indonesia’s vibrant culture and captivating natural views. Thus, by building a platform marketed toward these two audiences, Expedia might gain influence in Southeast Asia. However, the company should be wary of the low English proficiency that the country has yet to overcome and a strikingly different business culture that might lead to misunderstandings. If Expedia manages to work past these differences in the cultural code, it will enjoy the opportunities presented by Indonesia’s fast-growing economy and Southeast Asia’s largest online market.
References
Amianti, G., & Gorbiano, M. I. (2017). Indonesia jumps 19 places in EODB 2018: WB. The Jakarta Post, Web.
Boediono, L. (2017). Indonesia’s middle class vital for the country’s future. The World Bank, Web.
Indonesia Investments. (n.d.). National long‐term development plan (RPJPN 2005‐2025. Web.
Indonesia Investments. (2018a). Poverty in Indonesia fell to the lowest level ever. Web.
Indonesia Investments. (2018b). Tourism industry: Where do Indonesians go for their holiday? Web.
Legêne, S., Purwanto, B., & Nordholt, H.S. (2015). Sites, bodies and stories: Imagining Indonesian history. Singapore, Singapore: NUS Press.
Statista. (2017). Number of internet users in Indonesia from 2016 to 2023 (in millions). Web.
Trading Economics. (2019). Indonesia tourist arrivals. Web.
Valentina, J. (2017). Indonesia falls in 2017 English proficiency index. The Jakarta Post, Web.