Balancing Stakeholder Interests at the Indonesian Railways
(6 pages of text)
The chief executive responsible for the Indonesian railways, a state-owned enterprise, is under pressure to show profits, but he also needs to balance widely diverging stakeholder expectations that include inexpensive transportation and excellent customer service. The government subsidizes the railway’s passenger travel segment and has capped its fare prices, which has turned the railway’s mainstay into a loss-making business. The chief executive wonders how to best trade off the different stakeholder expectations. He needs to develop a plan to present to the minister for State-Owned Enterprises.
The case offers an opportunity to teach a classical strategy topic (managing shareholder value versus stakeholder value) in an unusual setting. The context of a state-owned enterprise in an emerging market adds another dimension to the delicate task of stakeholder management: the main shareholder is the state, and state-owned enterprises have the dual roles of serving the nation and making profits. The case requires students to reflect on balancing different stakeholder interests, which may negatively affect the company’s profitability. The case is suitable for strategy and general management classes, or in specific classes on emerging market strategy or Asian business.
Transportation and Warehousing
Indonesia, Large, 2012
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