Thhe Asian Journal of Technology Management Vol. 7 No. 1 (2014): 9-18 Linking Technology Capabilities to Marketing Requirements: Case of Indonesian Aircraft Industry Yulianto Suharto1* 1School of Business and Maanagement Institute of Technology, Bandung. Indonesia Abstract. The relationship between strategic technology planning and the overall business strategy has been one of the growing fields that attract much interest both from academics and industrials point of view. The increasingly important role that technology plays in today’s business success is well established. Strategic technology planning activities--within a corporate level--are often implemented by applying integrated planning instrument, which allow firms to consider both technology-oriented and product-oriented aspects. This paper is an attempt to explore the role of strategic planning in the high tech industry using a specific case of aerospace industry in Indonesia. In order to compete effectively in the open global market place, the company must learn to integrate technology management with strategic plana ning. In other words, all top managers have to link their technology capabilities to marketing requirements. Keywords: technology planning; business strategy; technology capability; marketing requirement; strategic mix 1. Introduction transpportation and sea, so as to support the mobility of business activities and citizens Aircraft industry is considered one of the who need a quick means of transportation. most important and the most strategic Aircraft industryy is also very strategic for industry for Indonesia. It became so Indonesia as an industrry-based high important to the economic development of technology; it could lead Indonesia in line Indonesia since the country has a wide area with other developed countries. It also and is naturally composed of thousands of showed how a nationalist rhetoricshapes islands with difficult and different the symbolic and physical construction of geographical conditions and thus requires technology (Amir, 2007). Based on these adequate transportation. The airplane has views, the Indonesian government develops the advantage in speed and power to this industry as a means for technology achieve when compared with land transfer process. *Corresponding author. Email: [email protected] DOI: http://dx.doi.org/10.12695/ajtm.2014.7.1.2 Print ISSN: 1978-6956; Online ISSN: 2089-791X. Copyright@2014. Published by Unit Research and Knowledge School of Business and Management-Institut Teknologi Bandung. 9 The Asian Journal of Technology Management Vol. 7 No.1 (2014): 9-18 Dirgantara Indonesia is the only aircraft flights with a range of 800 miles. The team industry in Indonesia, which assumed all the learned that many of Indonesian airlines missions that have been mentioned above. were still using Fokker 27, an aircraft type Dirgantara Indonesia is the name that was that soon will be phased out. A moderate inaugurated by the 4th President of the estimate suggested 400 mid-range airplanes, Republic of Indonesia, Abdurrahman with possibly a higher number in foreign Wahid in Jakarta, on August 24, 2000 for markets. In the early stage, the new project the aircraft industry in Indonesia, which sought to design a 30-seat aircraft, hence the replaces the name of IPTN (Nusantara title N230 and renamed it later to N250. Aircraft Industry) that have been pioneered Further study revealed that the market since about 25 years ago. wanted a 50- seat aircraft. At the 1989 Paris Air Show, Habibie publicly announced the 2. Business Strategy of Dirgantara N250 project to the international aviation Indonesia community (Amir, 2007). Dr. Habibie (long-time minister for The N250 is a propeller aircraft that cruises research and technology and a former at speeds up to 330 knots, the fastest president of the Republic of Indonesia) propeller airplane in the subsonic class. It himself started the Indonesia Aircraft relies on a fly-by-wire flight control system Industry (it used to be PT. IPTN and then that provides fully powered, electrically changed its name to PT Dirgantara controlled hydraulic service for both Indonesia) and promoted a concept of primary and secondary control surfaces of four stages of technological an airplane. The N250’s fly-by-wire covers transformation with a very catchy phrase: three axes—directional, lateral, and “begin at the end and end at the beginning,“ longitudinal—a great innovation encompassing four distinct stages- considering similar systems covered only assembling final products, manufacturing one or two axes. IPTN engineers later components for assembly, designing extended the N250’s structure to product components, and producing new accommodate 70 seats without additional systems. Although he did not disclose the engine power, making it more attractive in strategic mix explicitly, it is apparent that the market (Angkasa, 1995). the commuter aircraft production history of Dirgantara Indonesia: CN-212 (12 seater) At that time, Habibie was so confident that assembling in 1976, CN-235 (35 seater) the N250 would be competitive in the world manufacturing in 1983, CN-250 (50 market (Berita Buana, 1994). Habibie and seater) design and manufacturing in 1989, team sensed the need to expand its market and the plan to produce a completely to the North America. The company began new aircraft (around 100 seater) by 1995. its debut by opened a branch office in The company is already producing parts Seattle. It also planned to build a through subcontracting for Boeing (USA) manufacturing plant in Mobile, Alabama and undertaking high-level design activities (Republika Daily, 1995). Obviously, for a for CASA (Spain). developing country such as Indonesia, the superiority of the N250’s technical features In 1987, inspired by the emerging market of became a source of pride for the whole an 800 mid-range airplanes, a small team of country. Claimed to be entirely created by engineers conducted a technology-based Indonesian engineers, the N250 marked survey on the emerging market in regional what Habibie called the ‘‘stage of 10 Suharto, Linking Technology Capabilities to Marketing Requirements: Case of Indonesian Aircraft Industry technological independence’’ (Republika strategies in developing country, there is Daily, 1995), which proved that Dirgantara also a lack of clear understanding of option Indonesia had the capability to master and opportunities. For example (Sharif, sophisticated technologies and move 1994), in the foreseeable future, existing forward in the development of new ones. Indonesian industries will have to attempt The N250 was the symbol of technological the difficult task of survival in an open nationalism that Habibie and his engineers economy on the basis of upgrading their at Dirgantara Indonesia had relentlessly production facilities through imports. But advocated. they found out that, exporting raw-materials and primary goods to pay for imported 2.1. Technology Development machinery and process know-how, is a MIT Commission (MIT Press, 1989) losing business, because the purchasing conducted a research on industrial power of these commodities have steadily productivity in USA and states that --for fallen while that of machinery has continued success in world trade, new continuously risen over the last two ideas generated in the United States and decades. Furthermore, state-of-the-art elsewhere must be converted into machinery, which can give true competitive products and processes that world-wide edge in the international market, is normally customers want, when they want them, not sold but can only be exchanged for and before competitors can provide something equally valuable (Pavitt, 1990). them-and those must be produced efficiently and well--. This statement is Sharif (1994) proposed his attempt to equally valid for developing countries such integrate technological considerations into as USA, since they accept the free market overall business strategies of an enterprise concept and inspire to join the global for successful competition in the economy. Therefore, to compete effectively international market, under the current in the open global market place, a company circumstances in developing countries. It is must learn to integrate technology found useful to begin the desired integration management with strategic planning. In process by considering presently practiced other words, all top managers have to link business strategies, which give, rise to technology capabilities to marketing comparative advantage in the market place. requirements (Sharif, 1994). Dirgantara The business strategies can be categorized Indonesia, as a state-owned enterprise is as striving for: under a strong pressure to be more • Price leadership through producer cost internationally competitive and to improve minimization; its productivity. Top managers of • Quality leadership through user value Dirgantara Indonesia are fully aware on the maximization; pressure of integrating their business and • Niche leadership through segment technology strategies. However a feature specialization; and methodology for doing so is still lacking. In • Image leadership through customer addition to the lack of methodology of prestige creation integrating business and technology 11 The Asian Journal of Technology Management Vol. 7 No.1 (2014): 9-18 Figure1. Integrating Strategic Mixes to Market (Sharif, 1994). The shaded area in Figure 1 indicates that as the technology leader in small commuter although strategic emphasis may shift but segment