THE ASTRA GROUP: A PIONEER OF MANAGEMENT MODERNIZATION IN INDONESIA

Abstract

HE purpose of this paper is to describe the management system built by the Astra Group in conjunction with its development of the machinery industry and to attempt to identify why the Astra Group was able to become the pioneer of management modernization in Indonesia. The Astra Group is one of Indonesia’s leading business groups. The group’s holding company, PT Astra International Incorporated, which had 125 affiliated companies under its corporate umbrella in 1995, boasts the largest net sales of the 238 companies listed on the Indonesian stock exchange market. The Astra Group has three main features. First it holds over 50 per cent of the market share making it the largest automaker in Indonesia, Taking advantage of joint ventures using Japanese automobile capital, Astra laid down its business foundations in the manufacturing of automobiles and machinery. Its second feature is that it was a family business founded by William Soeryadjaya (Chinese name: Tjia Kian Liong; referred to below as “William”), who was born in 1923 in Majalenka in West Java. The holding company, PT Astra International, had long been held exclusively by William and his children until the end of 1992, when the fragility of family business became apparent. It was then that the founding family disposed of its shareholdings of PT Astra International because of the bankruptcy of a separate family business. As a result, PT Astra International and its affiliated companies, apart from the founding family’s ownership, came to be held by multiple owners, including Indonesian government financial institutions, domestic private capitalists, and foreign firms. The Developing Economies, XXXIV-3 (September 1996)