Enhancing Adaro’s Transformation Strategy for Business Diversification: The Aluminium Smelter Project

Abstract

Climate change has become a global concern, and at the 21st Conference of Parties (COP 21) held in Paris in 2015, participating countries agreed to phase out fossil fuels and replace them with renewable energy to achieve Net Zero Carbon Emissions by 2060. Adaro Energy Indonesia (AEI) is a coal (Fossil Fuel) producing company, and the company has prepared a business diversification to a non-coal business. The first step is business diversification for the Aluminium Smelter project. This paper focuses on enhancing Adaro’s transformation strategy for its ongoing business diversification efforts, specifically the Aluminium Smelter Project (Adaro, 2023). It explores the current state of Adaro's transformation, identifies areas for improvement, and provides strategic recommendations to strengthen the transformation strategy. The assessment uses Michael Porter’s Five Forces theory for market analysis, the PESTLE theory for external scanning analysis, and the Organizational Change Management theory for organisation analysis. These theories together are used to capture Adaro’s ideal transformation strategy conditions. SWOT and Resource-Based View (RBV) theories are applied to evaluate existing AEI’s organisational strengths. By comparing the ideal transformation strategy conditions with the current situation of AEI, areas that require enhancement are identified. By refining this strategy, the author is confident that Adaro will successfully navigate the business diversification process and capitalize on the opportunities presented by the Aluminium Smelter Project.