Entrepreneurship Management
Ralph Borsella
Entrepreneurship Management
Entrepreneurship Management
Edited by Ralph Borsella
College Publishing House, 5 Penn Plaza, 19th Floor, New York, NY 10001, USA Copyright © 2017 College Publishing House This book contains information obtained from authentic and highly regarded sources. Copyright for all individual chapters remain with the respective authors as indicated. All chapters are published with permission under the Creative Commons Attribution License or equivalent. A wide variety of references are listed. Permission and sources are indicated; for detailed attributions, please refer to the permissions page and list of contributors. Reasonable efforts have been made to publish reliable data and information, but the authors, editors and publisher cannot assume any responsibility for the validity of all materials or the consequences of their use. Copyright of this ebook is with College Publishing House, rights acquired from the original print publisher, Clanrye International. Trademark Notice: Registered trademark of products or corporate names are used only for explanation and identification without intent to infringe.
ISBN: 978-1-9789-2434-5
Cataloging-in-Publication Data Entrepreneurship management / edited by Ralph Borsella. p. cm. Includes bibliographical references and index. ISBN 978-1-9789-2434-5 1. Entrepreneurship--Management. 2. Entrepreneurship. 3. Industrial management. I. Borsella, Ralph. HB615 .E58 2017 658.421--dc23
Contents Preface....................................................................................................................................................................VII
Chapter 1 The Model and Performance of Partnership between Seed Company and Farmers................................. 1 Dian Widi Prasetyo, Idqan Fahmi and Yossi Wibisono
Chapter 2 The Effects of Partnership and Entrepreneurship Toward Business Performance of Oyster Mushroom (Pleurotusostreatus)...................................................................................................... 12 Edi Sucipto, Rina Oktaviani and Rizal
Chapter 3 Testing on Pecking Order Theory and Analysis of Company’s Characteristic Effects on Emitten’s Capital Structure...............................................................................................................22 Tajudin Noor, Bonar Sinaga and TB Nur Ahmad Maulana
Chapter 4 Strategy Formulation for Developing Batik Tulis........................................................................................... 31 Indah Eko Suryani, Lukytawati Anggraeni and Ujang Suryadi
Chapter 5 The Influence of Rupiah, Increase of Wages and Electricity on Working Capital and Profitability...................................................................................................................................................... 40 Maman Sumantri, Bambang Juanda and Dwi Rachmina
Chapter 6 Fit Analysis of Indosat Dompetku Business Model using a Strategic Diagnosis Approach................................................................................................................................................................. 52 Fauzi Ridwansyah, Rina Oktaviani and Imam Teguh Saptono
Chapter 7 Leading Sector Development and it’s Implicatons on the Lending Portfolio and Non-Performing Loan of Small Medium Enterprises.................................................................................... 63 Dewi Margareth Lumbantoruan, Bagus Sartono and Setiadi Djohar
Chapter 8 Comparative Feasibility Analysis of Modern and Traditional System of Broiler Chicken Farm Business.........................................................................................................................................73 Firda Rachma Amalia, Arief Daryanto and Hari Rujito
Chapter 9 Strategy for Business Portfolio Devlopment of Pt Sekar Laut, Tbk............................................................79 Homisah, Idqan Fahmi and Ahmad Mukhlis Yusuf
Chapter 10 Marketing Strategies for Developing Agrotourism in Jember Regency.....................................................90 Tantri Wijayanti, Musa Hubeis and Muksin Chapter 11 Marketing Mix Analysis of Natural Tourism Area ‘Kawah Putih’ and its Effect on Visitors’ Decision........................................................................................................................................... 100 Isyana Rahayu, Dodik Ridho Nurrochmat and Achmad Fachrodji Chapter 12 Determining Small and Medium Industry Main Product in Banyumas District................................... 109 Muhammad Unggul Abdul Fattah, Arief Satria and Gendut Suprayitno
_______________________ WORLD TECHNOLOGIES _______________________
VI Contents
Chapter 13 General Trade Partnership Performance of Albasia Wood in Leuwisadeng–Bogor............................. 117 Sarah Widyatami, Bambang Juanda and Trias Andati Chapter 14 Marketing Mix Factors that Influence the Desire to Purchase Fruit Beverages in the City of Bogor...................................................................................................................................................126 Iffatul ulfah, Ujang Sumarwan and Dodik Ridho Nurrochmat Chapter 15 Reduction of Bullwhip Effect on Commodity Supply Chain in Fresh Fruits and Vegetables Wholesale Lottemart Bogor.......................................................................................................... 136 Bimahri Qaulan Tsaqiela, Yandra Arkeman and Bunasor Sanim Chapter 16 Business Development Strategy for Specialty Coffee................................................................................. 145 Vharessa Aknesia, Arief Daryanto and Kirbrandoko Chapter 17 Customer Satisfaction and Loyalty of a Franchise Product Evidence from Nasi Bebek Ginyo Restaurant in Jakarta................................................................................................................. 156 Kartika Puspitasari Adiningsih, Rita Nurmalina and MD. Djamaludin Chapter 18 Designing Company Performance Measurement System using Balance Scorecard Approach............................................................................................................................................................... 165 Cecep Mukti Soleh, Idqan Fahmi and Imam Teguh Saptono Chapter 19 Consumer Segmentation of Refilled Drinking Water in Padang.............................................................. 174 Awisal Fasyni, Mukhamad Najib and Kirbrandoko Chapter 20 The Effect of Service, Product Quality, and Perceived Value on Customer Purchase Intention and Satisfaction................................................................................................................ 183 Dodi Iskandar, Rita Nurmalina and Etty Riani Chapter 21 Efficiency of Raw Material Inventories in Improving Supply Chain Performance of Cv. Fiva Food................................................................................................................................................... 195 Artadi nugraha, Sukardi and Amzul Rifin Chapter 22 Forestry Company Satisfaction Towards Online Information System Implementation of Forest Product Management (Si-Puhh)........................................................................ 205 Mangatas Simanjuntak, Arief Daryanto and Teddy Rusolono Chapter 23 Competitive Strategy of a Market Leader; Case of Ud. Primadona’s Prol Tape Jember - East Java................................................................................................................................................ 216 Adetiya Prananda Putra, Idqan Fahmi and Yossi Wibisono Chapter 24 Factors Influencing the Purchase Decision of Organic Tofu...................................................................... 226 Tantry Nugroho, Ujang Sumarwan and Kirbrandoko Permissions List of Contributors Index
_______________________ WORLD TECHNOLOGIES _______________________
Preface This book has been a concerted effort by a group of academicians, researchers and scientists, who have contributed their research works for the realization of the book. This book has materialized in the wake of emerging advancements and innovations in this field. Therefore, the need of the hour was to compile all the required researches and disseminate the knowledge to a broad spectrum of people comprising of students, researchers and specialists of the field. Entrepreneurship management can be defined as the application of entrepreneurial knowledge for the management of small and medium sized businesses. This book on entrepreneurship management discusses topics related to team-building, leadership and innovation. Entrepreneurship management deals exclusively with the facets of entrepreneurship that are required to run a business successfully. The aim of this book is to present researches that have transformed this discipline and aided its advancement. It explores all the important aspects of entrepreneurship management in the present day scenario and strives to provide comprehensive understanding of the subject. This book will serve as a reference to a broad spectrum of readers. Those in search of information to further their knowledge will be greatly assisted by this book. It will serve as a valuable source of reference for managers, entrepreneurs, students and researchers associated with this field. At the end of the preface, I would like to thank the authors for their brilliant chapters and the publisher for guiding us all-through the making of the book till its final stage. Also, I would like to thank my family for providing the support and encouragement throughout my academic career and research projects. Editor
_______________________ WORLD TECHNOLOGIES _______________________
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
1
Dian Widi Prasetyo*)1, Idqan Fahmi**), and Yossi Wibisono***) Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Study Program of Food Science and Technology, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 *)
ABSTRACT The partnership concept is expected to be one of the ways to improve agricultural sector in Indonesia, so that it will become a mutually beneficial partnership. One of the business entities in seed and supplier for horticultural crops is CV Rahmat Tani. However, the research has found some problems in the partnership system between CV Rahmat Tani and its farmers. Some of them are the products’ qualities which have no standard and the low price. The aims of this study were 1) to describe and evaluate the partnership that has been used by CV Rahmat Tani and partner farmers, 2) to analyze the farmers’ perception on the partnership’s implementation partnership, 3) to analyze CV Rahmat Tani’s perception on the partnership’s implementation and 4) to formulate strategies to improve the partnership’s performance. The tools of analysis used were gap analysis, EPA, and Mann Whitney Test. The result of the study showed that the pattern that tied the CV and its farmers was informal model. According to partner farmers’ perception, the priorities were 1) the delivery of seeds, pesticides, and fertilizers, 2) seeds selling price 3) cultivation and seeds management training and 4) post–harvest payment. The main priority that would be improved based on the owner’s opinion was the field supervisors’ inputs and recommendation. The recommendation strategies to improve the partnership are: 1) CV Rahmat Tani and its farmers together need to optimize planning; 2) the CV needs to provide trainings about cultivation and postharvest, and to oversee the quality of seed; 3) the CV needs to socialize the postharvest payment deadline; and 4) both parties should synchronize their perception and set some rules. Keywords: EPA, gap analysis, partnerships, seed
ABSTRAK Konsep kemitraan diharapkan menjadi salah satu cara untuk meningkatkan sektor pertanian di Indonesia sehingga ini akan menjadi sebuah hubungan yang menguntungkan. Salah satu badan usaha yang bergerak dibidang pembenihan dan supplier untuk tanaman hortikultura adalah CV Rahmat Tani. Namun, kerja sama tersebut dikhawatirkan akan menimbulkan sesuatu yang tidak diinginkan, misalnya kualitas barang tidak standar dan harga yang rendah. Tujuan dari penelitian ini adalah 1) mendeskripsikan dan mengevaluasi kemitraan yang telah terjalin antara CV Rahmat Tani dan petani mitra, 2) menganalisis persepsi petani terhadap pelaksanaan kemitraan, 3) menganalisis persepsi CV Rahmat Tani terhadap pelaksanaan kemitraan, dan 4) merumuskan strategi untuk meningkatkan kinerja kemitraan. Alat analisa yang digunakan adalah Servqual, EPA, dan Mann Whitney Test. Hasil penelitian menunjukkan bahwa pola kemitraan yang terjalin antara CV dan petani mitra adalah unit usaha bersama dengan sistem kontrak lisan. Menurut persepsi petani mitra, prioritas perbaikan kemitraan adalah 1) pengiriman benih, obat-obatan dan pupuk, 2) harga jual benih, 3) pelatihan dan manajemen budi daya benih, dan 4) pembayaran pascapanen. Prioritas utama yang akan ditingkatkan menurut pemilik adalah rekomendasi dan saran dari pengawas lapang. Kelima prioritas utama ini perlu diperbaiki guna mengoptimalkan kemitraan. Keywords: EPA, gap analysis, kemitraan, benih
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
2
INTRODUCTION The role of seed as the horticultural agribusiness primary means cannot be replaced by any other means. Whether a horticultural agribusiness grows or not is determined by the development of its seeding which can guarantee the availability of good quality seeds. Therefore, the use of good quality seeds is a must and an even more special attention is required in the implementation of the seeding process. One of the factors that decide the potential in resulting yielding varieties is the used seeds’ quality. The availability of our national vegetable grain seeds is 63% of our needs (Ministry of Agriculture, 2011). Seeding is closely related to the partnership concept. In this partnership, the seed company acts as the supplier of seeds and the provider of infrastructure, supervision, while the farmers act as the seed multipliers. One of the factors that incur partnership is the company’s inadequacy of field in meeting the production potentials. Forming partnership with farmers is one of the ways to maximize the company’s production. For farmers, this partnership concept has become one of the steps in empowering them (Sulistiyani, 2004). A partnership can increase their profits by 15% (Horne, 2009). Jember produced 363,320 tons of fruit and vegetable in 2013 (BPS Jember, 2014). On the other hand, Indonesian 2011 horticulture consumption per capita, especially fruits and vegetables was 72 kg/year (Ministry of Agriculture, 2012). The increasing production and consumption of fruit has attracted companies to enter the seeding business. Currently, there are 22 state and private entities which run in Jember horticultural seeding business, as listed in Jember Seed Supervision and Certification Office. One of those business entities which are engaged in the Jember horticultural seeding and breeder business is CV Rahmat Tani. This business entity was established as a CV in 2011 with a planting area of Jember and surrounding areas. In 2000, Mr. Damai As’anin started the assembly of a seed breeder group which would later on become CV Rahmat Tani. He had led this group since the beginning until it was legalized into a business entity or CV in 2011. This business entity has cooperated with 3 seed companies i.e. PT. Bisi International, Tbk, PT. Bernas Seed and PT. Agri Jaya Makmur Pertiwi. Currently, CV Rahmat Tani has 613 seed growers with more than 30 farmer groups spreading across the region.
ENTREPRENEURSHIP MANAGEMENT
A partnership attracts farmers because they can get higher prices per kilo and also get direct transfers of production innovations which would affect their productivity (Dileep et al, 2002). In addition to providing guaranteed supplies for the company, the farmers think this partnership brings benefits in the form of revenue, price stability and market certainty that will later absorb their products (Sriboonchitta and Wiboonpongse, 2005). But in its practice, some problems have arised. Some of the problems encountered in the partnership between CV Rahmat Tani and its partner farmers are the lack of hospitality visits or group meetings between the farmers and the CV owner, no transfer of knowledge about cultivation and seeding management received by farmers, the increasing number of emerging competitors/seed companies, the farmers’ seed selling price which is deemed to be less competitive, the dismissal of some farmer groups from the partnership due to their provocation on others to get out of the partnership, etc. The delay in the post-harvest payment and the low product prices have become the partnership prohibitive factors (Cahyono, 2007). Based on the previous stated background, the formulated research problems are: 1) how the pattern and implementation of the partnership exist between CV Rahmat Tani and its farmer partners; 2) how the farmers' perception to the partnership implementation is; 3) how CV Rahmat Tani’s perception of the implementation of the partnership is; and 4) How the implementation of the partnership can be improved. The purposes of this study are to describe and evaluate the partnership that has existed between CV Rahmat Tani and its partner farmers, to analyze the partner farmers' perceptions of the partnership’s performance, to analyze CV Rahmat Tani’s perception on the partnership’s performance and to formulate strategies to increase the patnership’s performance.
METHODS The research was conducted in the town of Jember, East Java, with the CV. Rahmat Tani as the object of the research. The study was conducted for more than eight months, starting in November 2013 and finished in June 2014. This research’s sampling method was the stratified proportional convenience sampling, a technique that is used on a population which is not homogeneous. The method grouped them and proportionally took samples
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
from each group (Suliyanto, 2006). The population in this study was all 613 CV. Rahmat Tani’s partner farmers in Jember district. 93 partner farmers or 15% of the total population were used as this research samples (Arikunto, 2006). The population was classified based on its members’ income, specifically which was derived from the cooperation, and divided into 4 classes. The numbers of the research samples which were based on their level of income can be seen in Table 1. Table 1. The number of samples on the CV Rahmat Tani partnership research Income Rp0 – Rp15.000.000 Rp15.000.001 – Rp30.000.000 Rp30.000.001 – Rp45.000.000 Rp45.000.001 – Rp60.000.000 Total
Population Samples 580 87 31 4 1 1 1 1 613 93
This study used 3 analyses i.e. the gap analysis, EPA (Expectation Performance Analysis), and Mann Whitney test. Gap analysis aims to determine the gap between the performance and its expectations before mapping those attributes into the matrix. Servqual or service quality is an analytical tool that can be used by the management to determine the customers’ perceptions and expectations toward the performance related to business or private companies, and public institutions (Haryanto, 2010). Servqual has five dimensions to measure the customers’ satisfaction (Daniel and Berinyuy (2010); Naik et al. (2010); Mosahab et al. (2010)), namely tangibles, responsiveness, reliability, assurance and empathy. All five dimensions can measure the observed company’s
Partner farmers
Partner farmers expectation
Partner farmers satisfaction
service user’s satisfaction and portray which dimensions are lacking, so improvement can be done on these dimensions. Unfortunately in its application, servqual with its five dimensions cannot be applied in several studies (Chakraborty and Majumdar, 2011). Dimension misapplication is the main problem in studies using this analysis, making their results unable to answer the purposes of the studies. Therefore, it is necessary to find the appropriate measurement dimensions which can answer the research objectives. Sugiyono (2013) described the four dimensions of measurement used to measure or evaluate a program namely context, input, process and product. This statement is supported by Sulistiyani (2004). Both sides’ assessments are used to compare both sides’ performance and expectations by the other sides to determine which attributes’ implementations that they believe are not optimal yet. Expectation Performance Analysis is done by combining the measurements of performance and expectations of each attribute to the EP grid, then both dimensions are plotted in it. The expectation values are plotted as the vertical axis, while the performance values were plotted as the horizontal axis using the average value in both dimensions as where the lines cut. EPA can describe the positions of the attributes in the Cartesian diagram and is able to show which attribute that should be the top priority or which should be improved (Danandjojo (2005); Sunarto (2006); Nurrasjid (2008); Aryantono (2008)). The research framework can be seen in Figure 1.
Partnership model
Partnership performance (partner farmers)
Attributes improvement priority (partner farmers)
3
CV Rahmat Tani
CV owner expectation
Partnership performance (CV Owner)
Attributes improvement priority (CV owner)
CV owner satisfaction
Partnership performance improvement strategy
Figure 1. Research framework
_______________________ WORLD TECHNOLOGIES _______________________
4
The next stage of the data analysis is to examine whether there are differences in the assessment of performances and expectations of the partnership’s attributes which are perceived by both partner farmers and CV owners. The hypothesis was tested using a non-parametric statistic analysis, namely the Mann Whitney test at 95% confidence level (α = 0,05). The test was performed by comparing the assessment of performances and expectations by both partner farmers and CV owners. Each research variable research is defined as follows: 1. Gap analysis, which covers: a. Context, matters that are related to the purpose of the partnership program and the initial step in forming a partnership program. This dimension is measured using the 8 partnership attributes, namely 1) the pre-planting planning; 2) cultivation and seed management training; 3) planting contract; 4) legal guarantees; 5) sustainability guarantee; 6) production target limitation; 7) determining the seed selling price; and 8) gifts. b. Input, the various inputs used to meet the partnership process. This dimension is measured using the 6 partnership attributes, namely 1) the funding loans; 2) the fertilizer and pharmaceutical loans; 3) communication; 4) trust; 5) seeds, pesticides, and fertilizers delivery; and 6) farming equipment. c. Process, the partnership work plan implementation based on the provided inputs. This dimension is measured using the 4 partnership attributes, namely 1) cultivation and pest control techniques; 2) the number of field supervisors; 3) field monitoring; and 4) input and suggestions. d. Product, the results achieved in the partnership. This dimension is measured using the 6 partnership attributes, namely 1) the seeds’ quality; 2) the seeds production; 3) the post-harvest payment; 4) the supporting infrastructure; 5) the report transparency; and 6) mutual benefit. These five dimensions are measured using the 1-5 measurement scale scores: a score of 1 = strongly disagree, a score of 2 = disagree, a score of 3 = neutral, a score of 4 = agree, and a score of 5 = strongly agree. This measurement scale was used to answer the statements on the questionnaire, while percentage measurement scale (%) was used in weighing the dimensions. 2. Expectation-performance analysis covers: a. The parties’ expectations, what both parties wish on the established partnership’s implementation, and
ENTREPRENEURSHIP MANAGEMENT
b. The parties’ performances, what implemented/ real events experienced by both parties on the established partnership’s implementation.
resultS The Partnership Pattern between CV. Rahmat Tani and Partner Farmers Since its establishment, Famai As'anin has never enforced any kind of written contract between the CV. he represents and the partner farmers. The deals are done by words only and based on each other’s trust regarding the price, investment plan, the amount of the loan, fertilizer and pharmaceutical, monitoring plan and how the amount of production targets is discussed with the farmer groups. The loans for funding, drugs and fertilizer make it easy for the farmers to cultivate the land. The amount of loan is Rp2.000.000 with no interest at all. As for drug-fertilizers loan, farmers are given the options to get it in the form of goods or money. The later option’s flexibility, especially because it doesn’t have to be used right away, makes it more favorable. The partnership’s mechanism and seed production process scheme can be seen in Figure 2. Partner companies, as the seed certificate holder, require partners to produce their open polinated or hybrid seeds. Partner companies are only to provide seeds which are to be reproduced under their supervision. The agreement between partners is in a written form which is equipped with legal guarantees for both parties. The contract is signed by both parties agreeing the types of varieties which will be grown, the seeds’ price, the seeds’ delivery, and the number of seed to be planted. After getting contracts with partner companies on the varieties, quotas, numbers and their targets, the CV will gather farming groups to discuss further plans with regard to the planting season timeline, the soil hectarage that’s going to be used, and their partner farmers. Next, the chosen farmer groups will assess the partner farmers that will participate in the partnership. With these partner farmers that they harbor, the farmer groups will discuss the plans when the planting season starts, when they harvest, and when they deposit to the CV. After all of those have been recorded, the plans are made and agreed by the farmers. The record will later be submitted to the CV to be recapitulated with other farmer groups’ records and will be informed to the
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
5
partner companies, regarding the number they order and the time of delivery.
will be made after the partner companies finish their sorting.
The CV will distribute the seeds to the farmer groups as soon as possible after it receives and recapitalizes the seeds they receive from partner companies. The farmer groups will then divide the seeds required by each farmer. The farmers will receive the seeds within 15 days before the planting season starts, so they can prepare the land. During the planting season, the farmers will get loans in the forms of funding, fertilizer, drugs and others. Field supervisors represent the CV owner in monitoring the farmers’ crops and providing brief trainings if required.
The previous explanation gives an idea about a model of partnership that’s established between CV Rahmat Tani and its partner farmers, which is an informal model. The partner farmers produce products at the request of CV Rahmat Tani (as the representative/business partner of PT. Bisi International, PT. Bernas Seed and Agri PT. Makmur Pertiwi) to meet the industry needs managed by partner companies.
Field supervisors coordinate with farmer groups in monitoring the planting to make sure it goes well until the results can be deposited to the CV. It usually takes approximately 3 months before the plants can be harvested and naturally dried using direct sunlight for 4–5 days until the water level is ± 14%. After this stage, the farmer will separate the good seeds from the bad ones. The seeds are then sent to CV Rahmat Tani to be sent later to the partner companies after it reaches the delivery quota of 7 ton per delivery. The payment
PT. BISI
CV Rahmat Tani provides production means and technical guidance so that the partner groups are able to meet the required product standards. The CV also helps with the seed, funding, training, supervision and others. Since its establishment, the CV has been using oral contract system and it has never been an obstacle to the partnership’s implementation, and it’s been maintained until today. This annual oral contracts show that this partnership is informal with no written agreement that binds both parties. It is emotional bonding and trust that bind both sides, making this cooperation last up to now.
PT. BERNAS
PT. AGRI M P
CV. Rahmat Tani
Quality Control
Farming groups
Farmer
Farmer
Field Supervisor
Cultivation Maintenance Harvest Drying Cleaning and Sorting
Figure 2. The partnership’s mechanism and seed production process scheme
_______________________ WORLD TECHNOLOGIES _______________________
6
ENTREPRENEURSHIP MANAGEMENT
The Perceptions of Partner Farmers and CV Rahmat Tani on the Partnership Implementation Table 2 shows that most of the studied attributes on the context dimension gave negative gaps between their expectations and performance, with the exception of assurance sustainability and gifts attributes which farmers considered satisfying. There were only 4 attributes that provided significant values under 0,05 i.e. pre-planting planning, cultivation and seed management training, legal security and the seed selling price. The cultivation training has become the focus of attention because it is the highest value compared to the other gaps. The farmers complained about the lack of this kind of training. They thought it could be the partnership’s added value considering that the agricultural development required an improvement of
farmers’ ability in farming and post-harvest processing. It is necessary for farmers to be introduced to new varieties of crops that they’re cultivating, the ways they cultivate them appropriately, the methods of attacking pest, and the optimal production of these crops. In the input dimension, there were 4 positive attributes that provided positive gap values i.e. attributes 9, 10, 11 and 12, while the two other attributes (attributes 13 and 14) gave negative values. The seed delivery attribute as well as the medicine and fertilizer attribute gave the biggest negative gap values which caused the farmers’ dissatisfaction. This dissatisfaction was caused by the late seed delivery in the 2013 planting season which eventually led to that season’s planting and harvesting setbacks.
Table 2. CIPP gap indicators on partner farmers and the CV owner Indicator
Partner farmer Performance Expectation
Gap
CV owner Performance Expectation
Gap
Context Pre-planting planning Cultivation and seed management training Planting contract Legal guarantee Sustainability guarantee Production Target Seed selling price Gifts Input
4,15 3,22 4,10 2,59 4,40 2,63 3,66 3,97
4,33 4,14 4,11 2,89 4,40 2,73 4,20 3,90
-0,18* -0,92* -0,01 -0,30* 0,00 -0,10 -0,54* 0,07
5 2 4 2 5 2 2 4
5 2 4 2 5 2 2 4
Funding loan Fertilizer and pharmaceutical loans Communication Trust Seeds, pesticides, and fertilizers delivery Farming equipment Process
4,65 4,60 4,25 4,42 3,44 3,41
4,62 4,55 4,22 4,25 4,24 4,02
0,02 0,05 0,03 0,17* -0,80* -0,61*
5 5 5 5 5 5
5 5 5 5 5 5
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Cultivation and pest control techniques The number of field supervisors Field monitoring Input and suggestions Product
3,97 3,36 3,33 3,83
4,03 3,54 3,57 3,87
-0,06 -0,18* -0,24*
3 4 4
3 4 4
0 0 0
-0,04
3
5
-2
The seeds’ quality The seeds production The post-harvest payment The supporting infrastructure The report transparency Mutual benefit Average
3,79 3,58 3,73 3,87 3,13 4,54 3,78
4,31 4,01 4,55 3,77 3,71 4,61 4,02
-0,52* -0,43* -0,82* 0,10 -0,58* -0,07 -0,25
4 4 5 5 4 5 4,04
4 4 4 5 4 5 4,08
0 0 1 0 0 0 -0,04
*) at the 95% significance level (t-test)
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
7
In the process dimension, all attributes gave negative gap values and the ones that were significantly different were the number of field supervisors and field monitor schedule. Most farmers illustrated the monitoring schedule as not being clearly compiled, making them rather difficult to assess their crops, and they asked for suggestions about what they should do if their crops were attacked by pests and diseases. This attribute needs to be improved to satisfy the farmers.
could result more delay in the payment. Therefore, the 15 days period is ideal for CV Rahmat Tani in settling the farmers’ rights. In general, this partnership could be considered as satisfying for both parties, although improvements are still needed. This conclusion is supported by Heviandri (2009) who found that 79,35% of the total customers were satisfied with the services. Table 2 illustrates the CIPP attribute gap on farmers and CV owner.
Finally, in the dimension product there was only one attribute that indicated a positive gap value which was CV Rahmat Tani’s supporting infrastructure. The other 5 attributes gave negative gap values, four of which were known to have significant differences between expectation and performance, namely attributes 19, 20, 21, and 23. Special attention is required in the postharvest payment attribute for providing the highest negative gap value. According to most farmers, the postharvest payment was considered too distant from the farmers’ expectation to get paid right after the goods were delivered. The rules state that the payment would be paid no later than 15 days after the products are received by CV. If financially capable, the company would as soon as possible fulfill the farmers’ rights for 50% of the total of what they’re entitled.
The Partnership Priorities
The CV owner’s part of the research gave 0 gap values in the context and input dimensions. In the dimension process, the field counselor’s input and suggestions were the attribute with the negative gap value of -2. It was described by the CV owner that according to him most farmers understood the technology and crop assessing better; thus some of the field counselor’s inputs and suggestions were not directly absorbed by the farmers. On the product dimension, there were no negative valued attributes. There was one attribute that indicated a positive gap value, namely the postharvest payment. The CV owner stated that the CV would immediately pay the farmers right after the CV got payment from the seeds selling by the partner companies as seed licenses during the specified time period of 15 days. The reasons for deciding 15 days period given by CV. Rahmat Tani in withdrawing money from the sale are the time required to sort the good seeds done by the CV and the distance between the CV Rahmat Tani and partner companies such as PT. Bisi International, which is located in the town of Kediri, not to mention the sorting process done by PT. Bisi International that
Indicators
Improvements
The average on each attribute shows that the partner farmers thought that the improvement priorities on attributes 2, 7, 13 and 21 were included in quadrant 1. These four attributes are the main priorities that need to be improved by the CV and the farmers, because these attributes’ expectation values are above the average in satisfying the partner farmers, while the actual satisfactory level perceived was due to the performance attributes that were still below average. This conclusion is supported by a research by Yola and Budianto (2013) and Puspitasari et al. (2010) who state that there are several service factors of the studied company that should be given more attention and their performance enhanced because they belong to quadrant I. In quadrant-II, there are 10 attributes i.e. 1, 3, 5, 9, 10, 11, 12, 15, 19, and 24. The performance of the attributes that belong to this quadrant should be maintained because what is expected by the farmers about this partnership matches the perception or the level of satisfaction felt by them, so they become added-values in this partnership. Attributes 4, 6, 14, 16, 17, 20, and 23 belong to the quadrant-III. This shows that these seven attributes do not need to be prioritized in their improvements because the farmers assess these attributes’ expectation level which is below average, and their implementation is even less special compared to other attributes. As for the quadrant-IV, there are 3 attributes namely 8, 18 and 22. As shown in Figure 3, the improvement priority according to the owner using the average value on each attribute indicates that there is one attribute that belongs to quadrant I, a quadrant where its attributes’ improvement is a top priority, which is attribute 18 (field supervisor’s input and suggestions). This
_______________________ WORLD TECHNOLOGIES _______________________
8
attribute’s performance needs to be optimized in order to give a sense of satisfaction at the partnership which will later impact the seed production. The inputs and the suggestions depend on the farmers themselves as they’re the ones who know the crops’ condition. Yusuf (2006) shows that the need in an immediate improvement of the assessed services belongs to the first quadrant (main priority). 10 attributes that go the quadrant II are attributes 1, 5, 9, 10, 11, 12, 13, 14, 22 and 24. These ten attributes should be maintained because they could satisfy CV owner, so they become added-values in this partnership. In the third quadrant there are 12 attributes that are considered to have low priorities i.e. 2, 3, 4, 6, 7, 8, 15, 16, 17, 19, 20, and 23. This indicates that these 12 attributes do not need to be prioritized in their improvement because the CV owner assess that their level of expectations is below average and their implementation is not even as special as other attributes’. There are 21 attributes that belong to quadrant IV. The companies had better allocate their resources on other attributes because these attributes are considered redundant since it is lower than average expectation level. The EP Cartesian diagram on partner farmers and the CV owner can be seen in Figure 3. The Comparison of Hopes, Performances and Dimension Weighs of the CV Owner and The Farmers The Mann Whitney test analysis showed that there was no significant difference between the farmers’ and the CV owner’s assessment on the 24 partnership attributes on the significancy level of 95% toward the initial notion. Based on the analysis, there are 4 attributes that have significant differences between the partner farmers and the CV owner’s assessment; they are the cultivation and seed management, the seed selling price, farming equipment, and the cultivation and pest control techniques owned by the farmers, while the other 20 attributes did not give any significant differences. The analysis on their performance indicates that there is one attribute that has a significancy value under the 0,05 i.e. farmers’ cultivation and pest control techniques that are owned, while the others do not give any significant differences.
ENTREPRENEURSHIP MANAGEMENT
This study also measured the dimension weights which were measured by each party. The dimensional weight measurement was used as supporting data in the analysis and the solutions suggested for the improvement of the partnership dimension. The dimensions’ weighings on each side were different. The product dimension was considered by partner farmers as the dimension with the largest weight (0,29), followed by the input dimension (0,28), context dimension (0,23), and process (0,20). The product dimension was also considered by the CV owner as the dimension with the largest weight of 0,35, followed by the process dimension (0,25) and the context and input dimensions which had the same dimension weight (0,20). Partnership Performance Improvemet Strategies The results of the research and the assessment of partner farmer-CV Rahmat Tani owner were intended to provide solution strategies to improve the partnership’s performance on both sides. A harmonization between the two parties is required so that the partnership can generate benefits. The application of the principles of partnership, cooperation and the presence of the partnership’s usefulness will make the partnership implementation run accordingly to reach its goals and benefit both parties (Fadi, 2011). The followings are some of the harmonization enhancement strategies for their main priorities: 1. CV Rahmat Tanis and partner farmers need to hand in hand optimize the planting planning and implementation in the field. The late delivery of seeds that would be planted in the 2013 spring planting season 2013 was in accordance with the farmers prioritized attribute improvements of the seeds, pesticides, and fertilizers delivery attribute (13). Seed delivery delays by the partner company were also the factors why these things happened. This is supported by Sudibyo (2006) who found that an unfavorable partnership is not expected to be sustainable. The problem is the improvement of those attributes is prioritized by the farmers, while the owner attribute put them in quadrant II or simply maintain them. If the improvements are still going to be done, the CV would lose their resources in terms of time, funding, and personnel. However, the benefits obtained would be at leasr as great because these attributes are included in the main priority. Therefore, CV. Rahmat Tani and the farmers should cooperate in optimizing the
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
5,00
CV owner expectation
Partner farmers expectation
5,00 4,50 4,00 3,50 3,00 2,50
9
4,50 4,00 3,50 3,00 2,50
2,00
2,50
3,00
3,50
4,00
4,50
5,00
Partnership performance (partner farmers)
1,50
2,00
2,50
3,00
3,50
4,00
4,50
5,00
Partnership performance (CV Owner)
Figure 3. EP Cartesian diagram on the partner farmers and the CV owner planting planning and its implementation in the field to address the problem of seed, pesticides and fertilizers delivery delay. 2. CV Rahmat Tani needs to provide cultivation and post-harvest training as well as coordinating seed supervising with farmer groups and field supervisors. Repairing associated trainings which are dedicated to farmers is needed, so their cultivation and pest control techniques will get better. This solution is given to make better the partnership attributes which are based on the farmers’ assessment, namely cultivation and seed management training (2) and the CV owner regarding the field supervisor’s input and advice (18). The problem is the owner puts attribute 2 in quadrant II, and the CV would need to expend resources to provide training. However, it is worth considering, so the farmers’ cultivation and management techniques would be better. These trainings will increase the farmers’ benefits in cultivation, post-harvest, harvest, and improving the products’ quality (Purnaningsih, 2006). CV should also further optimize the field supervisors who frequently interact with farmers and find out the problems as well as providing brief trainings to the farmers. Partner farmers should also apply appropriate cultivation methods, proper post-harvest, seed packing and seed storing in the warehouse, or at least not in the same room with grain/rice. 3. CV Rahmat Tanis should socialize the postharvest payment deadline. The next solution focus is the postharvest payment which is paid by the CV, in accordance with the improvement priority on the farmers EPA attribute 21. As described earlier, many post-harvest payments were delayed by many things, one of which was the product’s poor quality. The problem rose due to the inequality opinions because the CV owner put this
attribute in quadrant IV (redundant). Although it is considered as redundant, if it isn’t addressed by the CV, this attribute will cause a domino effect to many things especially the quality issue. The CV should be able to socialize this sort of thing to the farmers so that they can maintain the quality of the seed so as to save the sorting time. Hopefully, it will not take much time for the CV to obtain payment for the seed from the partner companies, so the CV can transfer the farmers’ payment on time. 4. The CV and farmers should meet to synchronize their views, ratings, and set the attributes’ priority as well as other rules that must be obeyed. There should be a way out in sorting out the difference in their perception by sitting together to discuss the attributes’ priority and rank so that they can determine which attributes require larger attention and improvement. The determinations were performed to synchronize their perceptions and avoid subjectivity in the measurements so that it does not harm any party. This happens on attribute 7 (seeds selling price) which farmers considered as a quadrant I attribute, and it needs to be fixed while the CV owner put it in quadrant III or as a low priority attribute. The attribute review focus is feared to threaten the cooperation. The seeds selling price is one of the rules/collective agreements that must be set at the initial part of the partnership of each planting season. If the farmers do not have objections, then they can deliver them at the beginning of cooperation or at each meeting. This attribute measurement is feared to be compromised by the farmers’ subjectivity that always wants price to increase every year. The discussions should also discuss other rules that must be obeyed by both parties. A third party (from academic or related agencies) who fully understand about partnership cooperation and can be objective without favoring one party can bridge both parties in joint discussions.
_______________________ WORLD TECHNOLOGIES _______________________
10
CONCLUSIONS AND RECOMMENDATIONS Conclusions This study concludes that the partnership model used by CV Tahmat Tani and its partner farmers is an informal model. There are 12 partnership attributes that haven’t been able to satisfy the partner farmers, while the CV owner considers almost all attributes to be positive or satisfying, except the field surpervisors’ inputs and suggestions attribute. Meanwhile, the EPA analysis on the partner farmers' perceptions of the partnership implementation of shows that the main priorities for the partnership’s improvements are 1) the delivery of seeds, pesticides and fertilizers; 2) the seeds selling price determination; 3) the cultivation and seed management training; and 4) the post-harvest payment, while the CV owner’s priorities are the field supervisors’ inputs and suggestions. Some of the improvement recommendations for CV Rahmat Tani’s partnership are: 1) the CV and the farmers need to optimize planting planning and its implementation in the field; 2) the CV needs to provide cultivation and post harvest trainings and coordinate the seed supervisory with the farmer groups and the field supervisors; 3) the CV needs to socialize the postharvest payment deadline; and 4) both parties have to sit together to synchronize their perceptions and set some rules that must be obeyed. Recommendations CV Rahmat Tani and the farmers must be objective and apply the same standards in assessing the studied partnerships attributes and are committed to comply with the agreement that has initially been mutually agreed. Further researches on the comparison between CV Rahmat Tani’s partnership with other partnerships needs to be conducted.
REFFERENCE Arikunto S. 2006. Prosedur Penelitian Suatu Pendekatan Praktik (Edisi Revisi-Vi). Jakarta: Rineka Cipta. Aryantono N. 2008. Kajian tentang penetapan kriteria fasilitas di pelabuhan dalam rangka mendukung angkutan antar moda. Warta Penelitian Perhubungan 20(6): 880–896. [BPS] Badan Pusat Statistika Kabupaten Jember. 2014. Kabupaten jember dalam angka. Http:// Jemberkab.Bps.Go.Id/ [22 Agustus 2014]
ENTREPRENEURSHIP MANAGEMENT
Cahyono B. 2007. Kajian program kemitraan usaha: kasus PT Aqua Farm Nusantara dengan kelompok tani ikan di Kecamatan Kalasan, Kabupaten Sleman, Daerah Istimewa Yogyakarta. Buletin Ekonomi Perikanan 7(2): 38–50. Danandjojo I. 2005. Kajian kualitas pelayanan angkutan laut penumpang jarak dekat di Pelabuhan Tenau Kupang. Warta Penelitian Perhubungan (7): 4–20. Dileep Bk, Grover Rk, Rai Kn. 2002. Contract farming in tomato: an economic analysis. Agricultural Economic 57(2): 197–210. Fadilah R. 2011. Analisis kemitraan antara pabrik gula jatitujuh dengan petani tebu rakyat di Majalengka Jawa Barat. Journal Transdisiplin, Komunikasi, Dan Ekologi Manusia 5(2): 159–172. Haryanto A. 2010. improving service quality of district eduacation offices (DEO) in Indonesian decentralized education system [disertasi]. Australia: Universitas Rmit. Heviandri R et al. 2009. Analisis kepuasan konsumen terhadap layanan di Bandara Soekarno-Hatta, serta implikasinya terhadap strategi pemasaran city check–in terminal di Jakarta. Jurnal Manajemen & Agribisnis 6(2): 124–139. Horne S. 2009. Contract Farming Profits Rise 15%. Crops. Proquest: 48. [Kementan] Kementerian Pertanian. 2011. Pedoman Teknis Pelaskanaan Pengembangan Hortikultura Tahun 2012. Jakarta: Kementerian Pertanian. [Kementan] Kementerian Pertanian. 2012. Laporan Kinerja Kementrian Pertanian Tahun 2011. Jakarta: Kementerian Pertanian. Nurrasjid Mn. 2008. Kajian tingkat pelayanan terhadap penumpang di Bandara Hang Nadim-Batam. Warta Penelitian Perhubungan 20(8): 1327– 1341. Purnaningsih N. 2006. Adopsi inovasi pola kemitraan agribisnis sayuran di Propinsi Jawa Barat [disertasi]. Bogor: Institut Pertanian Bogor. Puspitasari Nb, Suliantoro H, Kusumawardhani L. 2010. Analisis kualitas pelayanan dengan menggunakan integrasi IPA dan model kano (Studi Kasus di PT Perusahaan Air Minum Lyonnaise Java Jakarta. Jurnal Teknik Industri 5(3): 185–198. Sriboonchitta S, Wiboonpongse A. 2005. Analysis of contract farming in Thailand. Cmu Journal 4(3): 361–381. Sudibyo S. 2006. Pelayanan air bersih melalui kemitraan pemerintah-swasta (studi kasus:
_______________________ WORLD TECHNOLOGIES _______________________
THE MODEL AND PERFORMANCE OF PARTNERSHIP BETWEEN SEED COMPANY AND FARMERS
PDAM Kabupaten Semarang dan PT Sarana Tirta Ungaran) [tesis]. Semarang: Universitas Dipenogoro. Sugiyono. 2010. Metode Penelitian Administrasi. Bandung: Alfabeta. Sugiyono. 2013. Metode Penelitian Manajemen. Bandung: Alfabeta. Sulistiyani at el. 2004. Kemitraan Dan Model-Model Pemberdayaannya. Jogjakarta: Gava Media. Sunarto. 2006. Kajian Pelayanan Kapal Penumpang Di Pelabuhan Kendari. Warta Penelitian Perhubungan 18(12): 785–801.
11
Yola M, Budianto D. 2013. Analisis kepuasan konsumen terhadap kualitas pelayanan dan harga produk pada supermarket dengan menggunakan metode importance performance analysis (IPA). Jurnal Optimasi Sistem Industri 12(12): 301–309. Yusuf M. 2006. Kajian kepuasan pelayanan bagi PT Jasa Angkasa Semesta terhadap penumpang PT Lion Air di Bandara Soekarno-Hatta. Warta Penelitian Perhubungan 18(12): 766–784.
_______________________ WORLD TECHNOLOGIES _______________________
2
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS PERFORMANCE OF OYSTER MUSHROOM (PLEUROTUSOSTREATUS) Edi Sucipto*)1, Rina Oktaviani**), and Rizal***) Department of Agricultural Production, Study Pogram of Plantation Production, Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 68101 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Department of Agricultural Production, Study Pogram of Seed Production Technique, Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 68101 *)
ABSTRACT This study aimed to 1) analyze the effect of power on the performance of oyster mushroom business in Jember; 2) analyze the effect of partnerships on the performance of the white oyster mushroom business in Jember; and 3) analyze the effect of entrepreneurship on the performance of oyster mushroom business in Jember. The population in this study included the oyster mushroom cultivation farmers in Jember with the total population of 144 farmers; however, this study only used a sample size of 114 people. The data analysis method used was SEM (Structural Equation Modeling). Based on the analysis of data, it can be concluded that the power and partnerships have a significant effect, whereas entrepreneurship does not have a significant effect on the performance of oyster mushroom businesses in Jember. The study has managerial implications for the policy makers with the approach of: 1) prioritizing the power of the company that has a social characteristic by providing benefits in the form of non-materials, and this must be consistently implemented; 2) increasing partnership strategy through regular supervisions; 3) setting aside any entrepreneurial spirit which can jeorpardize the decision making in increasing production when prices are low. Keywords: power, partnership, entrepreneurship, business performance
ABSTRAK Penelitian ini bertujuan 1) menganalisis pengaruh kekuasaan terhadap kinerja bisnis jamur tiram putih di Kabupaten Jember; 2) menganalisis pengaruh kemitraan terhadap kinerja bisnis jamur tiram putih di Kabupaten Jember; dan 3) menganalisis pengaruh kewirausahaan terhadap kinerja bisnis jamur tiram putih di Kabupaten Jember. Populasi dalam penelitian ini adalah petani budidaya jamur tiram putih di Kabupaten Jember. Jumlah populasi sebanyak 144 Petani budidaya jamur tiram putih. Penelitian ini menggunakan ukuran sampel dari 114 orang. Metode analisis data yang digunakan SEM (Structural Equation Modeling). Berdasarkan hasil analisis data maka dapat disimpulkan bahwa kekuasaan dan kemitraan berpengaruh signifikan, sedangkan kewirausahaan tidak berpengaruh signifikan terhadap kinerja bisnis jamur tiram putih di Kabupaten Jember. Penelitian memiliki implikasi manajerial bagi pengambil kebijakan melalui pendekatan: 1) Memprioritaskan kekuasaan perusahaan yang bersifat sosial melalui memberikan imbalan berupa in-materiil yaitu konsisten dalam berkomitmen; 3) Peningkatan strategi pola kemitraan melalui pengawasan secara rutin; 4) Mengesampingkan jiwa kewirausahaan yang beresiko dalam memutuskan peningkatan produksi saat harga rendah. Kata kunci: kekuasaan, kemitraan, kewirausahaan, kinerja bisnis
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS...
INTRODUCTION Indonesia has a large and diverse varieties of rain forests which are potential to be utilized for the prosperity of the society, and fungi are one of the varieties that exist in the forests. Cultivation of fungi is expected to provide an economic value to farmers. Currently, the oyster mushroom production is not able to meet the market demand; therefore, Indonesia still has to import mushrooms to meet the demand. In addition, a large number farmers are not interested in cultivating these oyster mushrooms due to the limitations of revenues obtained and market information. In fact, the price of these mushrooms is high and stable, and they can be cultivated at any season and do not need a large capital. Also, the marketing and maintenance are not complicated and do not cause any pollution. However, the success of this type of business requires tenacity and perseverance (Herliyana et al. 2005). Sutarja (2010) states that the cultivation of oyster mushrooms (Pleorotus ostreatus) has not been fully developed in Indonesia, both as a business opportunity and as the fulfillment of public consumption. The cultivation of oyster mushrooms is conducted by packing them in a form of bag log media with a mixture of sawdust with corn flour and bran. Oyster mushroom businesses can run without relying on any seasons since the cultivation of these oyster mushrooms is carried out in a barn, and for the growing condition, the temperature and humidity are required to be regulated i.e. by spraying it with water. If the condition is dry or lacks of water, the growth will be disrupted. (General Directorate of Horticulture, 2007). Parjimo (2007) states that oyster mushroom businesses have a potential to increase the income of a community and to produce food that has a high nutritional value and is a source of vegetable-protein. Oyster mushrooms contain a high vegetable protein, are rich in vitamins and minerals, and have low-carbohydrate, fat and calories which are very useful for maintaining health. The microelements of the metallic minerals in the oyster mushroom are so low that they are safe to consume (Sumarmi, 2006). A large number of people are interested in cultivating white oyster mushrooms because they have a short maintenance period, and the mushrooms can be harvested from the age of 40 days after planting (inoculation) to the production period of 3 to 4 months. Some mushroom production centers in East Java
13
include Sidoarjo, Pasuruan, Magetan, Mojokerto, Jombang, Jember, and Batu; therefore, the national demand of oyster mushrooms can be met by the mushroom production centers of East Java. The pattern of development of the oyster mushrooms is mostly conducted through strategic partnerships (Setyawati, 2013). The partnership program aims to improve the ability of small enterprises to become independent through capital and training supports i.e. by enhancing or improving the Human Resources to be professional and skillful in supporting the marketing and business continuity in the future (Sulistyo and Adiatma, 2011). Samad (2011) states that efforts to solve the problem require great attention and concentration, one of which is by conducting partnerships among the economic actors themselves. To date, the existing partnerships are able to increase production from year to year. The steps that can be taken to promote the cultivation of oyster mushrooms include relationships, clients, connections, and partnership. (Wibawa, 2012) Rachmad (1998) mentions that partnership is basically a means to promote mutual partnerships. The philosophy of partnership is applied to improve the success of agroindustries in forcing the people's economy. Based on Law Number 9 Year 1995, partnership is the cooperation between a small businesses and a medium or large business on the principles of mutual needs, strength, and profits (Department of Agriculture, 1995). Thorelli (1996) argues that partnership is part of the network paradigm development given the fact that increased global competition occurs among the corporate networks. The development of real partnership in the network includes functional organization, norm based inter-realization, joint and coordinated management by the market driven organization (Morgan et al. 1994). Johnson (1999) adds that choice of partnership strategy is one form of strategic alliances that can improve business performance through several variables that influence the dependency, flexibility, quality of relationships, and information (Information Sharing). Internal goal of a business will greatly depend on the partners as this will improve the dissemination of information, efficient transactions, cost savings, technology, and innovation process. Also, it will shorten product development time and support logistics management and promotion programs. Market orientation is an application of the
_______________________ WORLD TECHNOLOGIES _______________________
14
marketing concept which is basically the philosophy of the company's work which consists of three basic elements, namely, business marketing strategy built on the philosophy that customers are the central point of the development strategy, company efficiency, and marketing organization as an integrated activity (Kohli et al. 1990). The advantage in business partnership (Contract Farming) is a marketing contract that includes efficiency in the collection of results, production of quality products, transport efficiency, relative stable price, and supply continuity capacity due to production planning. Meanwhile the weaknesses of business partnership pattern (Contract Farming) includes the institutional business which is usually based on formal ties with the clear system of incentives and sanctions (Reward and Punishment). The partner company usually has a network of specialized markets (supermarkets, processing industries, restaurants and hotels as well as exports) with strict requirements of quality standards, but lack of market flexibility because of marketing contract, and can only receive products that meet the quality standards determined by both parties (Saptana et al. 2009). Primarily, partnership is a synergistic relationship among various actors to achieve mutually agreed objectives, and at this level, all parties should share responsibilities for the emergent risks. One thing that should be observed is that the competitive and subsidized approach is still unable to give more optimal results if compared with the existing potential (Widyani, 2013). Application of partnership aims to tackle problems of lack of capital and technology for small-scaled farmers, to increase product quality, and to handle marketing issues. In fact, the implementation of this partnership often faces problem both from the farmers and their partners of the main company, causing the partnership to be unsustainable (Purwaningsih, 2007). Dorsch et al. (1998) conveys that good relationships will create a better level of trust, satisfaction and stronger commitment from both sides, as well as good communication. Communication at the level of involvement and adaptability of both parties will affect the sales (Boorom M et al. 1998). The main objective of a company in developing a variety of strategies is to increase profitability or performance (Narver JC and Slater SF, 1990).
ENTREPRENEURSHIP MANAGEMENT
Matsuno et al. (2002) states that along with the increasing pace of business competition, a company has to change its consumer-oriented strategy, the consumer-oriented companies should be able to boost their performance. Key to the success of economic development is the existence of continuous innovation undertaken by the innovators/entrepreneurs and researchers, and creative human beings innovate by producing new products, finding new markets, and creating new raw materials (Arsyad, 2012). Based on the above information, a number of things that become problems in oyster mushroom business especially in Jember can be identified. Jember as an important part of oyster mushroom suppliers of East Java has a weakness in partner farmers who do not understand the technical culture of oyster mushroom cultivation. The business failure of the farmers leads to an unsustainable future partnership because the partnership strategy built by the core company may not be relevant to be applied to the culture of the Jember society; therefore, it is important to search for an appropriate solution for the oyster mushrooms partnership with a policy approach in solving conflicts. It is also necessary to conduct research on influences of corporate power applied to the partner farmers, effects of core corporate partnership strategy in empowering farmers, and influences of farmer entrepreneurships that give impacts to the performance of partner companies. The relevant research title is the Effects of Power, Partnership and Entrepreneurship for White Oyster Mushroom Business Performance in Jember. From this study, it is expected to obtain managerial implication policies for decision makers in partnership companies in maintaining, improving and developing oyster mushrooms businesses. The scope of the research conducted on white oyster mushroom farmers in Jember was focused on analyzing variables associated with power, partnership, entrepreneurship and business performance. The study contained several hypotheses as follows: (H1) power has a significant effect on the performance of white oyster mushroom business in Jember; (H2) partnership has a significant effect on the performance of white oyster mushroom business in Jember; (H3) entrepreneurship has a significant effect on the performance of white oyster mushroom business in Jember.
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS...
Based on the hypotheses mentioned above, the objectives of the research were 1) analyzing the effects of power on the performance of white oyster mushroom business in Jember; 2) analyzing the effects partnerships on the performance of the white oyster mushroom business partnership in Jember, and 3) analyzing the effects of entrepreneurship on the performance of white oyster mushroom business in Jember.
METHOD The types of the research were the explanatory research and confirmatory research. The types and sources of data used were primary and secondary data where the primary data were obtained directly from the respondents from the white oyster mushroom farmers in Jember, and the secondary data were obtained from other related parties. The location of the research was in Jember, East Java, and the population of the research was white oyster mushroom farmers in Jember, amounting to 144 people. This study used a sample size of 114 individuals (19 indicators x 6 observations). The sampling technique used was a simple random sampling because the population was considered to have a homogeneous element based on the type of cultivated mushrooms i.e. white oyster mushrooms. The research variables consisted of three exogenous variables (X) and one endogenous variable (Y) supported by 19 indicators including: X1 = Power is one of the elements with the source of influence or has the authority to control the decision variables in a business strategy towards other members (Brown et al. 1995). Power is applied to build cooperation; however, if it is
15
not forced, it will be more productive than the coercive power (Dwyer, 1980), and there were four indicators in this variable (1. Awards/Rewards, 2. Sanctions/Penalties, 3. Authority and Rights, and 4. Expertise). X2 = Partnership is an interdependence between the two sides in which each side expects to gain (Saptana, 2010), and there were eight indicators in this variable (1. Focuses on the relationship/ fairness, 2. Identifications/Selection, 3. Contract Form, 4. Fair Dealing, 5. Strong Relationships, 6. Suggestions/Trainings, 7. Supports/Motivations, and 8. Evaluation). X3 = Entrepreneurship can be seen as an innovative behavior of the orientation of the strategy in the pursuit of profitability and growth. It is a creative and innovative capacity as the basis, tip and resource to search for opportunities to success. The essence of entrepreneurship is to create something new and different through creative thinking and innovative actions to create opportunities (Smith et al. 2003). There were three indicators in this variable (1. Innovation, 2. Risk-Taking, and 3. Proactive Action). Y1 = Business Performance is understood as a medium to measure results achieved by the company during a certain period of time. Measurement of business performance can be classified into financial performance (Financial) and marketing performance (Marketing). ROA is the ratio between the net profits earned by the total assets owned by the company while ROS is the ratio between the net profits earned by the total sales successfully made by the company. (Farrell, 2000). There were four indicators in this variable (1. Repeated Purchases, 2. Market Growth, 3. Rate of Return, and 4. Gain on Sales). The conceptual framework of this study is shown in Figure 1 below.
Oyster mushroom business
Power
Partnership
Entrepreneurship
Business performance
Partnership pattern
Figure 1. The conceptual framework
_______________________ WORLD TECHNOLOGIES _______________________
16
ENTREPRENEURSHIP MANAGEMENT
The data were processed and presented based on the principles of descriptive statistics, and for analysis and hypothesis testing, the Inferential Statistics approach was used. The method used in analyzing and testing the hypotheses in this study was a model equation or Structural Equation Modeling (SEM) using AMOS program package (Analysis of Moment Structure) version 18. In SEM, there are two groups of analysis carried out in stages, namely, (a) the measurement model and (b) structural model, and, there were two main analytical tools used in this study, namely, (1) test equipment SEM assumptions, and (2) test equipment model fit. Test data were proven to be valid and reliable in the previous test phase carried out through measures of normality of univariate or multivariate, outliers (data residing outside the distribution of most of the data), both univariate and multivariate and multicollinearity. Some tests of Goodness-of-fit model along with cut-off values are presented in Table 1. Table 1. Test of goodness of fit model overall Goodness of fit index Chi Square Significane Probality RMSEA GFI AGFI CMIN/DF TLI CFI Source: Ferdinand, 2002
Cutt of value Annotation Expected low Good fit ≥ 0,05 Good fit ≤ 0,08 Good fit ≥ 0,90 Good fit ≥ 0,90 Good fit ≤ 2,00 Good fit ≥ 0,90 Good fit ≥ 0,90 Good fit
RESULT There are four types of requirements to be met by the SEM assumption evaluation, namely, the size of the sample, multicollinearity test, outliers test and normality. Sample size In SEM modeling, the sample size that must be met is the sample size for the ML estimates with the condition that it is at least 5 x number of observed variable indicators (Ferdinand, 2002). This study used 19 indicator variables, indicating that the sample size was 19 x 6 = 114 samples; therefore, the total sample was 114 white oyster mushroom farmer partners from Jember.
Multicolinearity test Multicollinearity can be seen through the determinants of the covariance matrix. Determinant value which is very small or close to zero indicates an indication of the presence of a multicollinearity or singularity problem, so that the data cannot be used for research (Ghozali, 2005). The test results obtained a value of 1.200 from the Sample Covariance Matrix Determinant. Since this value was far from zero, it can be concluded that there are no multicollinearity data and singularity problems; therefore, the data could be used in the study Outlier test The criteria used are based on the value of Chi Square in degrees (Degree of Freedom) by the number of indicator variables at a significant level of p <0,05 (Ghozali, 2005). Test results of the outliers in the study appeared in Mahalnobis Distance or Mahalnobis D-squared. To calculate the value of Mahalnobis Distance, Chi Squares value was based on degrees of freedom, namely, the number of indicator variables of 19 at level of α = 0,05 at 30,143. The data that had Mahalnobis distance greater than 30,143 were the Multivariate Outliers. The Outlier Test results showed that the highest score was 30,051, indicating that there was no case of Mahalnobis Distance. Normality test Normality Test was conducted on both univariate and multivariate data of some variables used in the analysis. The assumption of normality can be made by using the value of z statistics for Skewness and the qurtosis and can be empirically seen in the Critical Ratio (CR) at the 0,05 level. If the value of CR is -1, 96 ≤ CR ≤ 1, 96, the data distribution will be normal for both Univariate and Multivariate data. The result of assessment of normality showed that the CR value was 1,038; therefore, it can be said that Multivariate Data were normal. The results of SEM analysis The model is good if the theoretical model development hypothesis is supported by the empirical data. The complete results of the analysis of SEM (Structural Equation Modeling) are shown in Figure 2. The results of test model construct (Figure 2) which were evaluated based on the Goodness of-fit Indices, Model Criteria as well as Critical Value that had the suitability of data are
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS...
17
Figure 2. Results of the analysis of SEM shown in Table 2, while the causality test results and hypothesis testing results of SEM models are described in Table 3. The test results showed that the coefficient value of the path between the power and the performance of the business was 0,563 with a significance level of 0,000 smaller than the hinted significant level (α) i.e. 0, 05, and the value of the CR was greater than that of the critical value required i.e. 2. These results support (receive) the first hypothesis in this study that has proven that power significantly influences the business performance. The assessment of the respondents indicates that power is well perceived well by the partner farmers of oyster mushrooms. This is because the core company has implemented rewards/awards as agreed by the partner farmers. The respondents classified as the oyster mushroom farmers at productive age with a higher education have a tendency to have an ideal personality. Therefore, it is essential to have non-material rewards in the form of mutual respects and respects in avoiding conflict. A social award is certainly expected to maintain consistent commitment and to maintain harmony. Application of power in accordance with
the conditions encountered will provide clarity of the roles and responsibilities, thus n will also improve the business performance. The results obtained are in line with the theory proposed by Shipley and Egan (1992); Johnson (1999) stating that positive influence between power and performance shows that the company's core business is exercising its non-coercive power, and this is proved to be more productive than the coercive power. Table 2. Suitability index of model SEM Criteria Chi square Significane probality RMSEA GFI AGFI CMIN/DF TLI CFI
Cut off value Expected lower 224,24 ≥ 0,05 ≤ 0,08 ≥ 0,90 ≥ 0,90 ≤ 2,00 ≥ 0,90 ≥ 0,90
Summary Annotation 237,344 Marginal 0,00
Marginal
0,08 0,90 0,90 1,70 0,90 0,90
Good fit Good fit Good fit Good fit Good fit Good fit
_______________________ WORLD TECHNOLOGIES _______________________
18
ENTREPRENEURSHIP MANAGEMENT
Table 3. Causality test result Variable Power (X1) Partnership (X2) Enterpreneurship (X3)
--> --> -->
Business performance (YI) Business performance (Y1) Business performance
Chanel coeffisien 0,563 0,360 -0,207
C.R.
Probability
Annotation
3,945 2,168 -1,267
0,000 0,030 0,205
Significant Significant Not significant
The test result shows that the coefficient value of partnerships on business performance was 0,360 with a significance level of 0,030 smaller than the value of the hinted significance level (α) of 0,05, and the CR value was 2,168 greater than that of the critical value required i.e. 2. These results support (receive) the second hypothesis in this study where it has been proven that partnership has a significant effect on business performance. Based on the assessment of the respondents, it is indicated that partnership is well perceived by partner farmers of oyster mushrooms because the core company has implemented monitoring functions to partner farmers in dealing with technical problems in the field.
performance has not been proven. The results of that survey showed that entrepreneurship is not well perceived by the partner farmers of oyster mushrooms, and this is due to the application of risk-taking which is not desired in oyster mushrooms partnership. Risktaking mentioned by the respondents is increasing a risk to increase the business despite its low production. It is not significantly favorable due to a strict monitoring function that constantly monitors the condition of the partner, supported by a strong power of core corporate. If the oyster mushroom partnership strategy finds indications of planting multiplication subtraction seeds (bag log) outside of the company core, the core will give a penalty sanction.
ased on the respondent characteristics, the time of partnership is still in the range of two years including trying out new oyster mushrooms so that the company's core supervisory functions are in the standard application of cultivation, maintenance, harvesting age determination, and yield harvesting and sorting. This is because the company, in fact, keeps the expected product standardization based on the consumer demand. The results obtained are in line with the theory proposed by Johnson (1999); Shipley and Egan (1992) stating that partnership has a positive influence on business performance. Control is an integral element of the pathway (channel) of effective partnerships that demonstrate how to help members achieve common interests, determine the objectives of honesty and mutual benefit to improve consensus, and assess the condition and provide encouragement, input and material supports to increase cooperation communication, so that business performance can be easily achieved.
In general, business opportunities in agriculture usually occur when the production price is low; therefore, it can be predicted that there will be a reduction in the number of farmers who cultivate oyster mushrooms. The decreasing number of farmers who cultivate agricultural products will have an impact on the decreasing amount of production, thus resulting in an increase of prices because it cannot meet the demands of the products. In fact, this kind of situation cannot be tolerated, in the sense that the core company is not approved of gambling in business management since all components have been integrated with the planning consistent with the amount of product produced based on the market uptake. The farmers themselves will not get significant effects with the addition of production capacity even though prices tend to go up and go down, because pricing on oyster mushroom partnership strategy is determined by the price at the beginning of the contract agreement, and the results obtained are still in line with the theory proposed by Purwaningsih (2007). Application of a partnership aims to address problems of lack of capital and technology for small-scaled farmers, to increase product quality, and to solve marketing problems; however, in reality, the implementation of these partnerships often face problems both from the farmers and partners of the company, and this may eventually lead to an unsustainable partnership
The test results showed that the path coefficient value of entrepreneurships on business performance was equal to -0.207 with a significance level of 0.205 greater than the hinted significance level (α) of 0.05, and the CR value was -1.267 less than that of the critical value required i.e. 2. The result does not support (rejects) the third hypothesis in this study stating that the statement of entrepreneurship has a significant effect on business
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS...
Managerial Implication This study has implications for managerial decisionmakers who plan to increase the performance of business in white oyster mushroom partnership. Thus, the results of this study should be followed up by the decision makers in order to obtain optimum profits. Based on the results of the analysis, there are three variable in improving the business performance, namely: (1) priority in company power (power) that implements awards/rewards as agreed by the partner farmers in the form of non-material rewards of mutual respect and conflict avoidance that can maintain consistency in committed and sustainable harmony; (2) enhancement of the partnership strategy by supervising functions of technical problems in the field in the form of a standard application of cultivation so that the company is able to maintain the expected standard of consumer products; (3) consideration on the courage of the risk-taking of entrepreneurial spirit (entrepreneurship) in cooperation partnership. The entrepreneurial spirit (entrepreneurship) which implements the function of risk aversion i.e. the risk-taking courage to enlarge the business despite the current low prices which are significantly unprofitable is set aside, because the partnership that applies strict monitoring functions constantly monitors the presence of the condition of the partners and supports the farmers by their strong core corporate power in oyster mushroom partnership strategy so that subtracting seed planting (bag log) outside the core company will lead to penalty sanctions.
CONCLUSIONS AND RECOMMENDATIONS Conclusions The results of research on the effects of power, partnerships and business on white oyster mushroom (Pleurotus ostreatus) business performance in Jember show that they are the most dominant indicators in the market growth in business performance variables, and the results prove that the white oyster mushroom businesses have been running well even though there are still obstacles that are required to be solved. Moreover, the research concludes that the Power Variable has a significant positive effect on the performance of white oyster mushroom businesses, and this result supports the first hypothesis in the study stating that power significantly affects the performance of white oyster mushroom businesses in Jember. Power of a social nature that does not force (non-coercive power) is more productive than the coercive power.
19
The Partnership Variable has a significant effect on the performance of white oyster mushroom businesses, and this result supports the second hypothesis in this study stating that power significantly influences the performance of white oyster mushroom businesses in Jember. The dominant indicator of the partnership is the assessment/supervision, and effective partnerships can take place through the assessments of the conditions, communication improvement, and encouragement and feedback to the partners. The Entrepreneurship Variable has no significant effects on the performance of white oyster mushroom businesses, and this result does not support (rejects) the third hypothesis in the study. The dominant indicator of entrepreneurship is taking a risk. The proven fact in support of the principle of partnership is less risktaking by a partner in increasing production capacity at the time of low prices and by the core company in the planning of production capacity that has been integrated in accordance with market demand, so the risk taken by a partner in increasing production capacity outside the partnership agreement is not liable the company. Recommendations The companies should recognize the capacity of their partners to realize the integration of sustainable partnership management through communication, visions, missions, motivation and attention in order to achieve a conducive environment, to make team work, and to solve conflicts using non-coercive power. Moreover, they should see through the entrepreneurial orientation viewpoint i.e. the desire to achieve the goal (need for achievement), and have a belief that success is due to their own efforts (internal locus of control), confidence (self-reliance), and openness (extroversion). For further research on the analysis of the effects of power, partnerships and business on the business performance of oyster mushrooms is still recommendable and should add the indicator variables of distribution channels in order get better results in general. The variable include 1) The adequacy of the amount, and adequacy of the number of units to be achieved in the quantity and quality required, 2) the delivery time, accuracy and speed, and easiness in obtaining the necessary goods, and 3) the completeness of product items demanded by the channel members
_______________________ WORLD TECHNOLOGIES _______________________
20
REFERENCES Arsyad L. 2012. Entrepreneur, inovasi dan pembangunan ekonomi. Agrimedia 17(1):14–16. Boorom M et al. 1998. Relational communication traits and their effect on adaptiveness and sales performance. Journal of the Academy of Marketing Science 26(1):16–30. Brown JR, Jean L, Johnson HF, Koenig. 1995. Measuring the sourceof marketing channel power a comparison of alternatif approahes. International Journal of Research in Marketing 12(4):333–354. [DEPTAN] Departemen Pertanian. 1995. Surat Keputusan. No. 940/Kpts/OT.201/10/1995. Tentang Pedoman Kemitraan Usaha Pertanian. Jakarta: Kementerian Pertanian. [DJH] Direktorat Jenderal Hortikultura. 2007. Statistik Produksi Hortikultura. Jakarta: Direktorat Jenderal Bina Produksi Hortikultura. [DJH] Direktorat Jenderal Hortikultura. 2013. Nilai Produk Domestik Bruto Komoditas Hortikultura Indonesia. Jakarta: Direktorat Jenderal Bina Produksi Hortikultura. Dorsch, MJ, Scott R, Swanson, Scott W, Kelley. 1998. The role of relationship quality in the srtatification of vendor as perceived by customers. Journal of the Academy of Marketing Science 26(2):128– 142. Dwyer FR. 1980. Channel member satisfaction laboratory insight. Journal Retail 56(2):45–65. Farrel MA. 2000. Developing a marked oriented learning organization. Australian Journal of Management 25(2):201–223. Ferdinand A. 2002. Structural Equation Modeling dalam Penelitian Manajemen. Semarang: Badan Penerbit Undip. Ghozali I. 2005. Aplikasi Amos Versi 16.0. Jakarta: PT Gramedia. Herliyana EN, Hidayat AP, Yulisman D, Mutakin J, Forlendiana L, Novianty LA, Agustian FR. 2005. Pelatihan budidaya jamur tiram. Prosiding Pelatihan Budidaya Jamur Tiram (Pleurotus spp). Pekan Ilmiah Kehutanan Nasional III: 2005 Sept 8: Bogor. Bogor Indonesia: Laboratorium Patologi Fakultas Kehutanan IPB. hlm 143– 154. Johnson JI. 1999. Strategic integration in industrial distribution channels managing the interfirm relationship as a strategic asset. Journal of the Academy of Marketing Science 27(1):4–18.
ENTREPRENEURSHIP MANAGEMENT
Kohli, Ajay K, Bernard JJ. 1990. Market orientation the construct, research preposition and managerial implication. Journal of Marketing 54(4):1–18. Matsuno K, John T, Mentzer AO. 2002. The effect of entrepreneurial proclivity and market orientation on business performance. Journal of Marketing 66(7):18–32. Morgan, Robert M, Shelby DH. 1994. The commitmenttrust theory of relationship marketing. Journal of Marketing 58(3):20–38. Narver JC, Slater SF. 1990. The effect of market orientattion on business provitability. Journal of Marketing 57(1):23–37. Parjimo A. 2007. Budi Daya Jamur Jamur Kuping, Jamur Tiram, dan Jamur Merang. Jakarta: PT Agromedia Pustaka. Purwaningsih N. 2007. Strategi kemitraan agribisnis berkelanjutan. Sodality: Jurnal Sosiologi Pedesaan, Komunikasi dan Ekologi Manusia 1(3):394–416. Rachmad M. 1998. Model pengembangan kemitraan antara badan usaha milik negara dengan koperasi agroindustri di Kabupaten Batanghari. Journal Manag Pemb 9(3):68–74. Samad A. 2011. Pengaruh implementasi kebijakan kemitraan usaha peternakan terhadap pendapatan peternak ayam ras melalui persaudaraan di Kabupaten Tangerang. Jurnal Transparansi 3(1):1–41. Saptana, Daryanto A, Daryanto HK, Kuntjoro. 2009. Strategi Kemitraan Usaha dalam Rangka Peningkatan Dayasaing Cabai Merah di Jawa Tengah: Peningkatan Dayasaing Agribisnis Berorientasi Kesejahteraan Petani. Bogor: Pusat Analisis Sosial Ekonomi dan Kebijakan Pertanian. Saptana, Mayrowani H, Agustian A, Sunarsih. 2010. Pola, peran, dan pola interaksi dalam kelembagaan kemitraan rantai pasok komoditas hortikultura pada pasar modern dan tradisional. Bogor: Pusat Analisis Sosial Ekonomi dan Kebijakan Pertanian. Setyawati S. 2013. Analisis Biaya dan pendapatan Industri Benih (Baglog) Jamur Tiram Putih (Pleurotus astreatus. Strain Florida) di Kecamatan Karang Ploso Kabupaten Malang. Malang: Balai Pengkajian Teknologi Pertanian Jawa Timur. Shipley D, Egan C. 1992. Power, conflict and cooperation in beetwer-tenant distribution channels. J International Journal of Service Industry Management 3(4):44–62.
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECTS OF PARTNERSHIP AND ENTREPRENEURSHIP TOWARD BUSINESS...
Sulistyo H, Adiatma A. 2011. Model optimalisai kemitraan usaha kecil menengah dan badan usaha milik negara melalui program kemitraan dan bina lingkungan untuk meningkatkan kinerja. Journal IPTEK 5(2):25–40. Sumarmi. 2006. Botani dan tinjauan gizi jamur tiram putih. Balai pengkajian teknologi pertanian Jawa Timur. INNOFARM: Jurnal Inovasi Pertanian 4(2):124–130. Smith ESY, Hampson I, Chaston BB. 2003. Managerial behavior, entrepreneurial style, and small firm performance. Journal Small Business
21
Management 41(1):47–67. Thorelli HB. 1986. Network between markets and herarchies. Journal Strategy Management (7(1):37–51. Wibawa BM. 2012. Memulai terjun dalam agribisnis: Belajar dari bisnis jamur tiram. Agrimedia 17(1):27–30. Widyani WM. 2013. Pentingnya pola kemitraan dalam rangka meningkatkan peran dan kinerja usaha mikro, kecil dan menengah. Jurnal Ilmiah Mahasiswa Universitas Surabaya 2(2):1–12.
_______________________ WORLD TECHNOLOGIES _______________________
3
TESTING ON PECKING ORDER THEORY AND ANALYSIS OF COMPANY’S CHARACTERISTIC EFFECTS ON EMITTEN’S CAPITAL STRUCTURE Tajudin Noor*)1, Bonar Sinaga**), and TB Nur Ahmad Maulana**) PT Pertamina (Persero) Jl. Medan Merdeka Timur 1A, Jakarta 10110 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 *)
ABSTRACT Pecking Order Theory (POT) states that hierarchy fundings based on the cheapest cost coming from internal fund, followed by external fund are needed to determine the capital structure. The research objectives were to examine the concept of POT in agriculture companies listed on Indonesia Stock Exchange in order to decide the capital structure policies as well as to analyse the effects of company’s characteristics to the emitten capital structure. The research used regression analysis with pooled least square (PLS) method in order to test POT, while the fixed effect model (FEM) was applied to analyze the effect of company’s characteristics on capital structure. Regression analysis in evaluating pecking order theory’s concept shows that internal funding deficit significantly gives positive influence to the change of long term debts. Regression analysis resulted from company’s characteristics (profitability, size, growth, tangibility and liquidity) shows that the company’s size and growth have significant positive effects on capital structure (leverage), whereas company’s profitability and liquidity have significant negative effects on capital structure (leverage). By contrast, company’s assets structure (tangibility) do not give significantly influence on capital structure (leverage) in 10% level of significance. The research shows that issuers in agricultural sector have implemented the concept of POT through the hierarchy usage of the cheapest financing from the internal as a priority followed by the external financing (debt). Keywords: Pecking Order Theory, capital structure, company’s characteristics, PLS, FEM
ABSTRAK Pecking Order Theory menyatakan bahwa penentuan struktur modal yang optimal didasarkan pada keputusan pendanaan secara hirarki berdasarkan biaya modal yang paling murah yang bersumber pada dana internal, baru kemudian menggunakan sumber dana eksternal. Penelitian ini bertujuan menguji penggunaan konsep Pecking Order Theory pada emiten di sektor pertanian yang terdaftar di BEI dalam menentukan kebijakan struktur modal serta menganalisis pengaruh karakteristik emiten di sektor pertanian terhadap struktur modal. Penelitian ini menggunakan analisis regresi dengan metode pooled least square (PLS) untuk pengujian konsep Pecking Order Theory, sedangkan dalam menganalisis pengaruh karakteristik emiten di sektor pertanian terhadap struktur modal digunakan metode fixed effect model (FEM). Hasil pembuktian konsep pecking order theory menunjukkan bahwa defisit pendanaan internal berpengaruh positif secara signifikan terhadap perubahan utang jangka panjang. Sedangkan hasil analisis regresi antara karakteristik perusahaan (profitability, size, growth, tangibility dan liquidity) menunjukkan bahwa size dan growth memiliki pengaruh positif signifikan terhadap struktur modal, profitability dan liquidity memiliki pengaruh negatif signifikan terhadap struktur modal, dan tangibility tidak memiliki pengaruh yang signifikan terhadap leverage pada tingkat signifikansi 10%.Hasil analisis menunjukkan emiten di sektor pertanian telah mengikuti kaidah pecking order theory melalui jenjang pemanfaatan sumber pembiayaan dari urutan termurah yaitu pendanaan internal dan kemudian pembiayaan eksternal yang paling murah (utang). Kata kunci: Pecking Order Theory, struktur modal, karakteristik perusahaan, PLS, FEM 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
TESTING ON PECKING ORDER THEORY AND ANALYSIS OF COMPANY’S CHARACTERISTIC...
INTRODUCTION The agricultural sector in Indonesia is one of the sectors with a strategic roles in national development. Natural resources richness and its diversity are considered as the aspect that boosts the role of agricultural sector in the national economic growth through its contribution to the national gross domestic product (Solahuddin, 2009). Agricultural industry is deemed quite promising. However, the risk of uncertainty makes it hard to obtain the access of funding sources from the financial institutions. According to the loan portfolio data of commercial banks released by Bank Indonesia, it was found that the amount of lending from commercial banks for agricultural business was still low, with the average of 7,54% per year during the period of 2008–2013 (Bank Indonesia, 2014). Kuncoro and Yulianita (2012) stated that the leverage ratio trend in agricultural sector during the period 2001–2009 was declining. This indicates that the use of external funds through debt instrument is still low. One of the fundamental and important problems faced by the company is capital structure determination. In order to fulfill the needs of funding, companies must be able to search for alternative funding sources through optimum capital structure policy. Martono and Harjito (2005) states that the optimum capital structure occurs when the specified capital structure can minimize the overall cost of capital usage or average capital cost. Company’s capital structure can be seen by the composition of long-term debt, short-term debt, preferred stocks, and common shares used to fund the operations of the company. Pecking order theory states that hierarchy fundings based on the cheapest cost coming from internal fund followed by external fund are needed to determine the capital structure (Myers, 1984). Pecking order theory assumes that company’s funding decisions are based on logical preferences of investors on company’s prospects, in which the management will be consistent on the company's goal to maximize shareholder’s profit (Myers and Majluf, 1984). The utilization of pecking order theory by a company is considered as a signal from the management that the company has good prospects after optimizing the capital structure.
23
According to pecking order theory, companies will prioritize the fulfillment of internal funds derived from retained earnings. In regards to company’s growth, it needs more funding from external sources, both from debts and shares. Funding needs fulfillment using debt instrument alone may increase the financial risks while, if the fund is filled from the sales of shares only, the company has to pay very expensive cost. Therefore, it requires a balance in using both funding sources. Frank and Goyal (2003) states that internal funding deficit appears when the cash is insufficient to fund the activities of the company in the future. In addition, Sham-Sunder and Myers (1999) in his research found that internal funding deficit significantly affects the change of company's debt level moreover, companies will make loan from debt instruments. In this case, internal funding deficit will positively influence on the company's debt level. Policies related to optimum capital structure for a company have been researched in many countries. Furthermore, this encourages researchers to analyze the use of pecking order theory in determining company's capital structure policy in agricultural sector. The influence of company’s characteristics against the company's capital structure in agricultural sector was analyzed in this research as well, because the policy of the company's capital structure would directly aeffect on company’s financial. This research needed to be conducted in order to address the following problems: Do agricultural companies in Indonesia use the pecking order theory in determining the capital structure policies? What does the influence of corporate characteristics on the company's capital structure? The research objectives were to prove the implementation of pecking order theory in determining company's capital structure policy. To analyse the influence of company’s characteristics on the capital structure. This study was limited to the analysis of companies in the agricultural sectors, listed on the Indonesia Stock Exchange (BEI) before 2009 and had financial reports fully published, during the period of 2009 to 2013. The framework used in this research is described in Figure 1.
_______________________ WORLD TECHNOLOGIES _______________________
24
ENTREPRENEURSHIP MANAGEMENT
Analize the affect of company’s characteristic to the capital structure
Profitability
Analize the proving of pecking order theory’s implementation
Internal funding deficit
Size of the company
Company's capital structure
Tangibility
Managerial implications
Liquidity Proving the implementation of the pecking order theory
Growth
Figure 1. The research framework
METHODS The data used in the research were secondary data, derived from agricultural emitten’s financial reports from 2009 to 2013, comprising of balance sheets, cash flow reports, equity changes, profit/loss, and notes to the financial reports and other information supporting this research. The research objects included twelve listed companies, namely PT Astra Agro Lestari Tbk; PT Gozco Plantation, Tbk; PT PP London Sumatra Indonesia Tbk; PT Sampoerna Agro Tbk; PT Sinar Mas Agro Resources and Technology Tbk; PT Tunas Baru Lampung Tbk; PT Bakrie Sumatera Plantation, Tbk; PT Central Proteinaprima, Tbk; PT Dharma Samudera Fishing Industries Tbk; PT Inti Agro Resources, Tbk; PT Bisi International, Tbk; and PT Bumi Teknokultura Unggul, Tbk. In terms of proving the pecking order theory implementation, the dependent variable was long-term debt changing (ΔLTD) and the independent variable was internal funding deficit (DEF). Meanwhile, to analyse the influence of company’s characteristics on the emitten’s capital structure, leverage (Lev) is used as a dependent variable and the independent variables included profitability, company size, growth, tangibility and liquidity. Measurement and hypotheses used in this research are described in Table 1.
The research used simple regression analysis for panel data. Processing and statistical data analysis were accomplished by Eviews 6, SPSS, and Microsoft Excel. The research model used to determine whether the implementation of pecking order theory had or had not been implemented was derived from an equation developed by Shyam-Sunder-Myers (1999), as follows: ΔLTDit = α0+ α1 DEFit+ ε1 Information: ΔLTDit : The magnitude of changes in long-term debt of issuers to-i in year t : Internal funding deficit emitten to-i in DEFit year t : Constanta/intercept α0 : Regression coefficient which is a α1 coefficient pecking order theory : Error term ε1 This model was used to identify funding needs over the company's internal financing deficits. In these conditions the company will require external financing that can be either debt or equity issuance. Regression analysis will be conducted by the criteria: if the regression coefficient value of internal funding deficit is near to zero, the company uses the equity issuance for its funding deficit, and vice versa. Moreover, it means that the implementation of pecking order theory has not been proven within the scope of this research.
_______________________ WORLD TECHNOLOGIES _______________________
TESTING ON PECKING ORDER THEORY AND ANALYSIS OF COMPANY’S CHARACTERISTIC...
25
Table 1. Variables used in proving the concept of the pecking order theory and analysis of company’s characteristics influencing the capital structure Variables A. Proof of concept pecking order theory Dependent Variables Long term changing Independent Variables Deficit cash flow
Measurement
Hypothesis
∆LTD = LTDit – LTDit-1
DEFt = DIVt + Xt + ∆Wt + Rt - Ct
H1: internal deficit funding has positive significant influence on long term debt changing.
B. Analysis of effects on corporate characteristics to the level of debt Dependent Variables Leverage Lev = Total Debt/Total Asset Independent Variables Profitability Company size (Size)
Pro = EBIT/Total Aktiva Sze = ln(sales)
Company growth (Growth)
Gro = % change in total assets
Aktiva Structure (Tangibility)
Tan = Fixed Asset/Total Asset
Liquidity
Liq = Current asset/Current liabilities
The research model used to determine the relationship between company’s characteristics and level of leverage is as follows: Levit =
β0 + β1 PROit+ β2 SZEit+ β3 GROit+ β4 TANit+ β5 LIQit+ ε2
Information: Levit : The amount of debt level from emitten to-i in year t α2 : Constanta/intercept β2 – β6 : Regression Coefficient PROit : Profitabilitas emitten to-i in year t SZEit : Company size of emitten to-i in year t GROit : Company growth of emitten to-i in year t TANit : Tangibility of emitten to-i in year t LIQit : Liquidity of emitten to-i in year t ε2 : Error term The research used some classical assumption test that must be fulfilled before doing the regression analysis including normality test, autocorrelation test and test heterokedastisitas to produce BLUE (Best Linear Unbiased estimators) (Gujarati, 1993).
H2: Profitability has negatively influenced the capital structure H3: Size has positively influenced the leverage H4: Growth has positively influenced the leverage H5: Tangibility has positively influenced the leverage H6: Likuidity has negatively influenced the leverage
Statistical criteria test was conducted through several tests including t test to know whether each independent variable partially affected the independent variable. F test was conducted to see whether the independent variables simultaneously generated significant effects on the dependent variable, and Test Coefficient of Determination (R2) to analyse how far the independent variable was able to explain the diversity of dependent variable. R2 was used to measure successful level of regression models used to predict the value of dependent variable.
RESULTS The Proof of Pecking Order Theory’s Concept The results of model estimation using pooled least square (PLS) showed that the independent variable (internal funding deficit) had a positive significant influence on long-term debt changeing. It is evident from the t-statistic probability value (0,0000) which was less than the value of alpha (5%) (Table 2). The regression equation in regression analysis proved the pecking order theory, is as follows:
_______________________ WORLD TECHNOLOGIES _______________________
26
ENTREPRENEURSHIP MANAGEMENT
ΔDit= -20271+0.37118 DEFit The equation showed that if the regression coefficient value of each variable was considered to be zero, the magnitude of changes in the company's long-term debt would decrease by Rp20.271. Moreover, Table 2 showed a R2 value of 0,6814. Indicating that the model is able to explain the diversity of variables used in the model i.e 68,14% and 31,86% was explained by other variables. Table 2. Results of model estimation method of Pooled Least Square (PLS) Variable Constanta DEF R2 Adj R2
Coefficient t-stat Prob -20.271,94 -1,1471 0,2560 0,3712 11,1400 0,0000 (*) 0,6814 F-stat 124,0997 0,6760 Prob (F-stat) 0,0000 Information: (*) significant at the level α = 0,05
F-test was used to determine influence of independent variables on the dependent variable. F-statistic value was equal to 124,0997 with a probability value of 0,000 smaller than alpha (α=5%). This means independent variables had significantly influenced the dependent variable. Meanwhile, t-statistic showed that the value of the variable DEF was 11,140 and probability value (0,0000) was less than alpha (α = 5%) indicating. That the internal funding deficit (DEF) had a significant positive effect on long-term debt changing (Delta LTD) at the significance level of 5%. This is consistent with the initial hypothesis that internal funding deficit had a significantly positive effect on long-term debt change. Some studies related to the pecking order theory showed different results, depending on the sample. The results are consistent with the research conducted by Ruslim (2009) which indicated that the variable of internal funding deficit had a significantly positive effect on the company's capital structure while Jibran et al. (2012) showed that internal funding deficit was positively influential but did not show a significant effect on capital structure of non-financial companies listed on the Karachi Stock Exchange (KSE). The research conducted by Atiyet (2012) also showed that the internal funding deficit was positively influential but did not show a significant effect on capital structure of companies listed on the French stock exchange and incorporated in the SBF 250 Index in the period of 1999 to 2005. Hsu et al. (2013) in his study of multinational
and domestic companies in the USA also showed that both multinational and domestic companies applied the concept of pecking order theory in determining the funding structure of company, where companies tend to close their internal funding deficit by using debt. Company Overview Debt to equity ratio (DER) is the ratio of debt to company equity that demonstrates the power of company owner to cover the obligations from outside parties. The level of debt in company’s capital structure is very important in measuring corporate risk, because debt will lead the company to the interest payments and periodically principal payments. The average DER of agriculture companies during the period of 2009 to 2013 was 2,16% –1437,67%. SMAR, TBLA, UNSP, CPRO and DSFI are emitten with DER value of more than 100%. CPRO is emitten with the highest average DER value per year compared to other companies in the agricultural sector, accounted for 1437,67%, which means that the company's capital derived from debt is 14,38 times larger than that coming from equity. In contrast, AALI, GZCO, LSIP, SGRO, IIKP, BISI and BTEK are emitten with DER value of less than 100%. IIKP is emitten with the lowest average DER value per year compared to other emitten in the agricultural sector, accounted for 2,16%, which indicates that the company’s capital deriviedng from debt is lower than that coming from equity (Figure 2). Leverage ratio of agricultural emitten listed on the Stock Exchange tended to increase during the period of 2009 to 2013. Indicating that there were yearly additions of emitten debt level during the period of 2009 to 2013. This condition also illustrates that the level of confidence from banking sector or lender to the emitten in the agricultural sector is higher. As stated by Andati et al. (2012), banking credit is an investment decision effecting the value of company. This condition the concern by company's management in determining the company's capital structure. CPRO, DSFI and UNSP were three emitten with the highest average leverage ratio accounted for 0,81, 0,74 and 0,57 respectively while, IIKP emitten is the emitten with the lowest leverage ratio (0,024) as seen in Figure 3.
_______________________ WORLD TECHNOLOGIES _______________________
TESTING ON PECKING ORDER THEORY AND ANALYSIS OF COMPANY’S CHARACTERISTIC...
The Effects of Company’s Characteristics on Capital Structure Results of model estimation using Fixed Effect Model (FEM) can be described in Table 3. Base on Table 3, profitability and liquidity have probability value of t-statistic less than the value of alpha (α = 10%), so it can be concluded that the profitability and liquidity had a significant negative effect on the capital structure (leverage) while the size of the company (size) and growth (growth) had a significant positive effect on the capital structure (leverage). Meanwhile, the structure
27
of assets (tangibility), had a probability of t-statistic greater than the value of alpha (α = 10%), so that the structure of assets (tangibility) did not have a significant effect on the capital structure (leverage). The regression equation between company’s characteristics and the capital structure (leverage) is as follow: Levit = -1,112 – 0,427PROFit + 0,107SIZEit + 0,198GROit + 0,083TANit + 0,004LIQit
Figure 2. Debt to equity ratio in agricultural companies from 2009 to 2013
Figure 3. Debt-to-Asset Ratio (DAR) 2009–2013 agricultural sector issuers
_______________________ WORLD TECHNOLOGIES _______________________
28
ENTREPRENEURSHIP MANAGEMENT
Table 3. Results of descriptive statistics using a fixed effect model Variable Constanta (C) PRO SZE GRO TAN LIQ R2 Adj R2
Coef -1,1123 -0,4267 0,1072 0,1979 0,0830 -0,0039 0,9004 0,8634
t-stat -1,5611 -3,2753 2,1955 1,9679 0,3171 -1,9073 F-stat Prob (F-stat)
Prob 0,1258 0,0021** 0,0336** 0,0555*e 0,7527ee 0,0632*e 24,3076 0,0000
Information: *significant at the level α=0,1; ** significant at the level α=0,05
The equation indicates that if the value of the regression coefficient of each independent variable is considered to be zero, then the magnitude of debt level (leverage) in agricultural sector will decrease of by 1,112. R-squared value of 0,9004 indicates that the model used is able to explain the variance in the model, with independent variables of 90.04% and the rest of 9,96% is explained by other variables outside the model. F-test shows the value of 24,308 and probability value of 0,0000 (less than the value of alpha (α=10%)). This means independent variable are significantly influenced by dependent variable. Some researches analysing the influence of company's characteristics on capital structure policy showed different results, depending on the sample used in the study. Hossain and Ali (2012) that used a sample of 39 companies listed on the Dhaka Stock Exchange
during 2003–2007 shows that profitability, tangibility, liquidity, and managerial ownership have significant negative effect on leverage, while the growth opportunity and non-debt tax shield have significant positive effects on leverage. Furthermore, Pahuja and Sahi (2012) indicates that liquidity and growth have significant positive effect on the determination of company's capital structure, while size, profitability and tangibility do not have significant effects on the determination of company's capital structure. Interestingly, Seftianne, and Hand (2011) studied about manufacturing companies listed on Indonesia Stock Exchange in the period of 2007 to 2009 and their results indicate that growth opportunity has significantly negative effect on the company's capital structure, and variable size has a positive effect on the company's capital structure while variables such as profitability, liquidity, business risk, asset structure, and managerial ownership have no significant effects on company's capital structure. In Comparison between company's earning after tax and total debt agricultural emitten from 2011 to 2013 (Figure 4), there is a tendency for agricultural companies to increase the company's debt when the profit has decreased, and when the profit of the company has increased the amount of company’s debt decreases. This is relevant with the studies showing that profitability has a significant negative effect on leverage. It occurs because when the company applies the concept of pecking order theory induring the period of internal funding deficit, it will use its funding sources derived from the debt.
Figure 4. Earnings after tax and total debt of agricultural emitten
_______________________ WORLD TECHNOLOGIES _______________________
TESTING ON PECKING ORDER THEORY AND ANALYSIS OF COMPANY’S CHARACTERISTIC...
Base on the description of comparison between sales used in determining the variable size, the higher level of sales will be followed by the rising debt of the company. Companies with their highest will require greater capital and increase of investment in order to meet the production capacity. Therefore, companies applying the concept of pecking order theory will choose external sources of financing to fulfill capital needs and investment when internal funding sources are insufficient. Managerial Implications Base on the analysis in proving of pecking order theory and analysis of company’s characteristics influence capital structure, a number of managerial implications for corporate managers, investors and potential investors, as well as banks and other financial institutions can be formulated, as follows: (1) for the managers of agricultural companies, the results of this study indicate that the company has followed the rules of the pecking order theory which utilize the cheapest sources of funding to fulfill corporate financing. However, company also needs to consider the sources of debt financing exceeding the equity, because financial distress will be appearing in the future. It happens because the debt interest will burden the company, so that the company will undergo financial difficulties leading to bankruptcy or default; (2) The company will also have to be concerned with the characteristics of the company such as profitability, size, growth and liquidity which have significant influences on the capital structure and tangibility has not significant effects on capital structure. Positive and negative influences of these characteristics should also be known by managers in order to maximize the company's capital structure to achieve efficiency of capital cost (3) for investors and potential investors, the research gives a description of the company's capital structure in agricultural sector. There were seven listed companies with the value of debt to equity ratio above 100% in 2013 (SMAR, UNSP, CPRO, TBLA, GZCO, BTEK and DSFI) and five other emittens with the value of debt to equity ratio below 100% (AALI, LSIP, SGRO, IIKP and BISI). Investors are able to get information on emittens with theirs potentials to grow and risk of default.
29
CONCLUSIONS AND RECOMMENDATIONS Conclusions The results of regression analysis in proving the pecking order theory indicates that the internal funding deficit has a significantly positive effect on the company's long-term debt changing. This indicates that in determining the company's capital structure policy, agricultural companies have implemented the concept of the pecking order theory; results of regression analysis on the company’s characteristics (profitability, size, growth, tangibility and liquidity) by using a fixed effect model shows that at the 10% significance level, profitability and liquidity have a significantly negative effect on the capital structure (leverage), and size and growth have significantly positive effects on the capital structure (leverage), while the tangibility has not significant effects on the capital structure (leverage). Recommendations Some suggestions that can be used as a reference for subsequent scientific writings related to the proof of pecking order theory and the relationship of company’s characteristics to the company's capital structure, are as follows; (1) the emittens management in the agricultural sector is advised to keep on following the rules of pecking order theory by using fund from the cheapest source and tax savings. However, management is expected to be cautious with the increasing debt because it can increase the risk of default; (2) in order to establish a good policy on the company’s capital structure, management needs to control the characteristics of particular factors of profitability, size, growth, tangibility and liquidity; (3) the Indonesian government institutions should establish a regulation in requiring financial institutions, both banks and nonstate owned banks (BUMN) to delivering business credit for agricultural sector in a particular portion; (4) regard to obtain more comprehensive research related to pecking order theory proving, further research can be conducted by using other data of agricultural companies that have not been listed on Indonesia Stock Exchange or other industrial companies as comparison; (5) the results of the study shows that variable characteristics of company is only able to explain the variety in models of 90,04%. Therefore further research can be conducted with the addition of other variables, such as the addition of external variables, in order to see how far these variables affect the capital structure.
_______________________ WORLD TECHNOLOGIES _______________________
30
REFERENCES Andati T, Siregar H, Sinaga BM, Achsani NA. 2012. Liberalisasi keuangan dan pengaruhnya terhadap nilai Q-Tobin sektor industri dasar dan kimia dan perbankan. Jurnal Managemen & Agribisnis 9(1): 13–22. Atiyet BA. 2012. The pecking order theory and the static trade off theory: comparison of the alternative explanatory power in French Firms. Journal of Business Studies Quarterly 4(1): 1–14. Bank Indonesia.2014. Statistik ekonomi dan keuangan Indonesia tahun 2014. http://www.bi.go.id/id/ statistik/seki/terkini/moneter/Contents/Default. aspx [3 April 2015]. Frank M, Goyal V. 2003. Testing the pecking order theory of capital structure. Journal of Financial Economics 97: 217–248. Gujarati DN. 1993. Ekonomi Dasar. Jakarta: Erlangga. Hossain F, Ali A. 2012. Impact of firm specific factors on capital structure decision: an empirical study of Bangladeshi Companies. International Journal of Business Research and Management 3(4): 163–182. Hsu CH, Chiang YC, Liao TL. 2013. Testing pecking order behaviors from the viewpoint of multinational and domestic corporations. Investment Management and Financial Innovations Journal 10(2): 158–165.
ENTREPRENEURSHIP MANAGEMENT
Jibran S, Wajid SA, Waheed I, Muhammad TM. 2012. Pecking at pecking order theory: evidence from Pakistan’s Non-finansial Sector. Journal of Competitiveness 4(4): 86–95. Kuncoro A dan Yulianita B. 2012. Kebutuhan likuiditas sektor korporasi Indonesia. Kajian Stabilitas Bank Indonesia 19: 99–115. Martono, Harjito A. 2005. Manajemen Keuangan. Edisi Kedua. Yogyakarta: Ekonisia. Myers Steward C. 1984. The capital structure puzzle. Journal of Finance 34: 572–592. Myers SC, Majulif N. 1984. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics 13: 187−221. Pahuja A, Sahi A. 2012. Factors affecting capital structure decisions: empirical evidence from selected indian firms. International Journal of Marketing, Financial Services and Management Research 1(3): 76–86. Ruslim H. 2009. Pengujian struktur modal (teori pecking order): analisis empiris terhadap saham di LQ-45. Jurnal Bisnis dan Akuntansi 11(3): 209–221. Shyam-Sunder L dan Myers SC. 1999. Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics 51: 219–244. Seftianne, Handayani R. 2011. Faktor-faktor yang mempengaruhi struktur modal pada perusahaan publik sektor manufaktur. Jurnal Bisnis dan Akuntansi 13(1): 39–56. Solahuddin S. 2009. Pertanian: Harapan Masa Depan Bangsa. Bogor: IPB Press.
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY formulation for DEVELOPING BATIK TULIS
4
Indah Eko Suryani*)1, Lukytawati Anggraeni**), and Ujang Suryadi***) Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 6810 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Study Program of Poultry Management Business, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 *)
ABSTRACT The objective of this study was to formulate a development strategy in order to maintain the existence of Batik Tulis Rolla Junior. The study used a case study approach with Rumah Batik Tulis Rolla Junior as the research object. The data were analyzed by a value chain approach to determine the internal and external conditions influencing the existence of the Batik Tulis Rolla Junior. Furthermore, this study also used the analysis of Internal Factor Evaluation (IFE), External Factor Evaluation (EFE), Internal-External (IE) Matrix, SWOT, dan Quantitative Strategic Planning Matrix (QSPM) to create the development strategy. The results show that the strategies that can be recommended to Rolla Junior include 1) increasing the capital by Kredit Usaha Rakyat (KUR) program, 2) conductiong expansions to other regencies, 3) creating a website/blog to promote and perform business transactions, 4) increasing the frequency in joining exhibitions or EXPO both in regional and national levels, 5) conducting researches to solve the problem of coloring which requires sun rays, 6) conducting cooperations with raw material suppliers (backward integration), and 7) finding alternative suppliers of raw materials especially from the areas closer to Jember district. Keywords: development strategy, batik tulis Rolla Junior, SWOT, QSPM
ABSTRAK Penelitian ini bertujuan merumuskan strategi pengembangan sehingga dapat menjaga eksistensi Batik Tulis Rolla Junior. Penelitian menggunakan pendekatan studi kasus dengan Rolla Junior sebagai objek penelitiannya. Data dianalisis dengan pendekatan rantai nilai untuk mengetahui kondisi internal dan eksternal yang berpengaruh terhadap Batik Tulis kemudian menggunakan analisis Internal Factor Evaluation (IFE), External Factor Evaluation (EFE), Internal-External (IE) Matrix, SWOT, dan Quantitative Strategic Planning Matrix (QSPM) untuk menyusun strategi pengembangan Batik Tulis Rolla Junior. Hasil penelitian menunjukkan bahwa strategi-straegi prioritas yang dapat direkomendasikan kepada Rolla Junior yaitu 1) peningkatan permodalan melalui program Kredit Usaha Rakyat (KUR), 2) melakukan ekspansi ke luar daerah Jember, 3) membuat situs web/blog untuk mempromosikan dan transaksi jual beli produk, 4) peningkatan kuantitas keikutesertaan dalam acara pameran atau EXPO baik di tingkat regional maupun nasiona, 5) melakukan penelitian untuk mengatasai kendala pewarnaan yang membutuhkan sinar matahari, 6) melakukan kegiatan kerja sama dengan pemasok bahan baku (integrasi ke belakan, dan 7) mencari alternatif daerah pemasok bahan baku khususnya yang lebih dekat dengan kabupaten Jember. Kata kunci: strategi pengembangan, batik tulis Rolla Junior, SWOT, QSPM
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
32
INTRODUCTION Batik has become part of creative industries in Indonesia, and recently, the business sector of creative industries has comparatively and competitively been able to exploit natural resources or potential areas in Indonesia. The value of the national batik industry production in 2010 reached USD 8,4 billion employing 17.082 people in 326 Batik business units in Indonesia (Sudantoko, 2011). Jember Batik has been established as a superior product by the Department of Industry and Trade in Jember; therefore, it requires product promotional activities conducted by the local government; however, the government has not maximized its participation in marketing activity to promote the product. The coordination among the Small and Medium Enterprises (SMEs), local authorities, and related agencies have not been integrated so that the promotion activity of Jember Batik out of the area has not been maximized. This Jember Batik has the characteristics of tobacco leaf, cocoa, dragon fruit, bamboo, butterfly, bird, and musical instrument patterns. The House of Batik Rolla Junior is one of the Small and Medium Enterprise (SME) engaged in training, selling and popularizing the original Jember Batik. Also, as one of the Small and Medium Enterprises (SMEs), the House has a strategic role in national economic development, contributes to the economic growth and employment, and plays a significant role in improving the image of Jember Batik from the local level to the national level. Most workers in the House of Rolla Junior Batik are females who are often absent from work due to various reasons; as a result, this condition often inhibits the production of batik. However, the House has 127 employees so that the process of production can still run even though some of the employees are absent without any notice. The problems faced by this House can be overcome if there is a balance between the improvement of the internal and external factors. The internal factors include the improvement of the quality of human resources (especially the entrepreneurs), so that they can improve their business management. Moreover, the external factors create the need for a healthy business climate, an implementation of balanced and mutual profitable partnership, an even and continuous information
ENTREPRENEURSHIP MANAGEMENT
flow, an increase in the role of supporting institutions, associations, governments, or other institutions. Although the House of Rolla Junior Batik has a number problems, it has maintained its existence by continuing its development and growth. This can be seen from its sales report that increases every year. In 2010, it was recorded that sales reached Rp460.071.900, and in 2011, it increased by 133% reaching USD981.937.156. In 2012, the House’s relisted sales increased by 23,3% reaching Rp1.210.473.250; in addition, its sales value was above the average sales of the Medium Enterprises in Jember Regency i.e. Rp600.000.000 in 2012. The positive trend of the House of Rolla Junior Batik in increasing its product sales should be maintained through the formulation and implementation of a development strategy. The implemented development strategy should involve mapping and control of the value chain in order to improve the competitiveness of a business unit. It can integrate all activities to create a link among companies and their customers, suppliers, and members of other distributions. The value chain approach is a holistic technique to improve the ability of companies to face competitiveness. From the above description, the House of Rolla Junior Jember Batik requires to implement an appropriate business development strategy in order to face competition and make its business development strategy to be known by the community of Jember in particular and to the Indonesian society in general. In addition, the development of this business is expected to empower women in Jember. Thus, it can indirectly help the improvement of the welfare of the Jember community. Therefore, the authors are interested in conducting a research in the Development Strategy Analysis for the House of Rolla Junior Batik in Jember. There are studies that become benchmarks of this research. The first one is a number of studies conducted by Pandelaki (2012) on the Agricultural Development Strategy Commodities Seaweed in Nain Island North Minahasa, Usman (2013) on the Analysis of Marketing Strategy in East Bekasi Regency, Adiastuti (2009) on the Development Strategy on Marketing Management (Regional Company Case Study on Tohaga Market, Bogor Regency), and Marius (2009) on the Effect of internal and external Agricultural Instructor to the agricultural instructor competition, Raf (2012) on the Analysis of Explanatory Competitiveness Factor Center of Batik in Jambi, Wispandono (2010)
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FORMULATION FOR DEVELOPING BATIK TULIS
on the Effect of Business Environment on the Batik Craftsman Performance in Bangklan. The researchers mentioned above used a technique similar to that of this study in which guidelines for preparing a strategy by David (2012) were used. Based on the previous studies mentioned earlier, most of them used SWOT analysis on weaknesses, strengths, opportunities and threats identification. Also, they used QSPM to analyze priority of strategy on strategy determination to overcome the existence problems. The purposes of this study were to identify the value chain of the House of Rolla Junior Batik, to analyze the factors that become opportunities, threats, weaknesses, and strengths affecting the development of the House, and formulate business development strategies that can be implemented by the House in continuing its development and growth.
METHODS This research developed the development strategy framework based on the preparation of a strategy argued by David (2012), and the flow chart of this research can be seen in Figure 1. This was a descriptive, qualitative and quantitative study, and the types and sources of data used were primary and secondary data. The primary data were obtained directly from the source while the
33
secondary data were obtained through interviews and other interested parties involved in this research. The research was conducted in the Educational Training Institution and House of Rolla Junior Jember Batik, East Java. The selection of the locations was determined (purposive sampling) by the consideration that the researchers live closer to the research locations, and it is the only institution existing in Jember. The respondents of this research included the owner of the House of Rolla Junior Batik, Head of Department of Industry and Trade of Jember, Head of Department Small and Medium Enterprises, and Cooperative unit in Jember. The strategy formulation was conducted in three phases including input, synchronization, and decision. The first phase, input contains the basic information required to formulate a strategy. The model used at this stage was the Internal Factor Evaluation (IFE), and External Factor Evaluation (EFE). Evaluation on internal factors was performed by calculating the average weight of each internal key factor and subsequently arranging the results in a matrix evaluation of each factor. In matrix evaluation, the factors of strengths and weaknesses were added by using the weighting method of paired comparison. Then, matrix of Internal Factor Evaluation (IFE) was used to see the internal location of the company.
Rolla Junior batik
Internal environment (strenght and weakness)
External environment (opportunity and threat)
Company location
Strategy alternative
Relevant strategy
Priority strategy
Figure 1. The framework of research
_______________________ WORLD TECHNOLOGIES _______________________
34
The second phase, synchronization focused on the creation of an alternative strategy to integrate internal factors (strengths and weaknesses) and external factor (opportunities and threats). The models used in this phase included the Strength-Weakness-OpportunitiesThreats (SWOT) matrix and Internal-External (IE) matrix (Sudirman, 2012). This phase also provided some alternative strategies that become inputs for the model of Quantitative Strategic Planning Matrix (QSPM) at the decision phase (Nejad, 2012).
RESULT Internal Factor Analysis The main strength owned by the House of Rolla Junior Jember Batik in developing its products is that it has an appropriate promotional method i.e. by actively participate in exhibitions of excellence local products, and these can attract visitors’ attention so that the promotion of the products can be effective. This factor has a value of 4 and weighs 0,082 resulting in a weighted average score of 0,29 so that this factor has highly relative importance in the development of Batik in Jember. In addition, another strength owned by the House is that it has good business prospects and a
ENTREPRENEURSHIP MANAGEMENT
friendly environment since the House has implemented an environmentally-friendly production to produce high quality of batik products. This factor has a weight of 0,079 with a rating of 4 resulting in a score of 0,318, thus indicating that this factor is an important strength, and the performance of the House is excellent so that its potential should be optimized. The results of IFE analysis can be seen in Table 1 However, the main weakness owned by the House of Rolla Junior Batik is the lack of online marketing. In the era of globalization, it requires the use of technology in various fields, including online marketing. Currently, online sales are increasingly prevalent so that it is a necessary activity on sales promotion method. Lack of internet service usage has ranked number 1 and its weight value is 0,079, thus resulting in a score of 0,079. This indicates that this weakness factor is an important drawback requiring an immediate action. The result of the analysis shows the total weighted score of 2,52, and this suggests that the capacity as the internal factor for the House of Rolla Junior Batik in the development of its batik products is above average. Therefore, it can be seen that the House has the strength to cover up its weaknesses in order to maximize its development.
Tabel 1. The result of internal factor evaluation (IFE) Strength Having a good business prospect and friendly environment Having the appropriate promotional method by actively participate in exhibitions of local excellence products Having high quality products Having a wide range of marketing Managing a working atmosphere and mutual cooperation between the employees and the managerial team well Updating its batik patterns Having a training facility in making batik Having creativities to innovate (production and marketing) Total strengths Weakness Lack of educated human resources Limited knowledge of science and technology Limited working capital Less intensive networking Lack of online marketing Total weaknesses Weighted total score
Quality 0,079 0,082
Rating 4 4
Score 0,318 0,329
0,062 0,079 0,059
4 3 3
0,247 0,238 0,176
0,059 0,082 0,056 0,559
4 3 4
0,235 0,247 0,224 2,015
0,103 0,103 0,074 0,082 0,079 1,000
1 1 2 1 1
0,103 0,103 0,147 0,082 0,079 0,514 2,529
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FORMULATION FOR DEVELOPING BATIK TULIS
External Factor Analysis Evaluation of external factors was performed by calculating the weighted average of each external key factors arranged in a matrix evaluation of each factor. In the evaluation matrix, the factors of opportunities and threats were added by using the weighting method of paired comparison. Moreover, the use of the External Factor Evaluation (EFE) matrix was intended to see the external circumstances. The results of EFE analysis can be seen in Table 2. The main opportunity owned by the House of Rolla Junior Batik to develop its product is the "Go Green” governmental program where the score is 0,098. The House uses natural dye which is safe for skin and environmentally friendly, and its policy in using natural dyes is in accordance with the “Go Green” governmental campaign. In addition, the government of Jember Regency promotes batik since it becomes an icon for its current multiple exhibition events held each year, and this becomes a potential opportunity for the development of Rolla Junior Batik. Batik becomes one of the excellent products of Jember, so the government supports it for its development, especially in the form of multi-event promotion activities held in Jember. The factor that has the highest drawback score is the weather constraint especially for coloring with a weight of 0,101. Some colors will not produce maximum
35
brightness if they are not dried in the sun. Because of this reason, the House of Rolla Junior Batik is unable to fulfill its consumers’ demands during the rainy season. The analysis also shows the result of a total weighted score of 3,041, and this score is above the average, suggesting that the House gives responses to external factors for its development. This result indicates that the House has been able to maximize its opportunities and avoid its threats. This phenomenon is expected to continue so that the existence of Rolla Junior Batik can be maintained and it can continue its development and growth. Company Site Analysis Based on the results of the analysis using IFE and EFE, scores of IFE of 2,52 and EFE of 3,024 were obtained. These scores were then incorporated into the analysis on Internal External (IE) factor. The evaluation results in Figure 2 show that the site of the House of Rolla Junior Batik is in quadrant II (Growth and Build). Therefore, the strategies that can be applied for the optimal development of the House are by applying intensive and integrated strategies which can be conducted by mergers and strategic alliance. Intensive strategy can be performed through market penetration, market and product development, and integration strategy can be performed by backward, forward and horizontal integrations.
Tabel 2. The result of external factor evaluation (EFE) Opportunity The existence of the governmental "Go Green" program Small loan program with little interest for SMEs Batik promotion by the local Government of Jember since Batik becomes an icon of the annual current exhibitions of multiple events Availability of batik market which always evolves Quality of reasonably good raw materials Increasing number of working visits from other local governments Strong customer loyalty Good relations with the national entrepreneurs Total of opportunities Threat Low level of purchasing power High cost of raw material support Increase in fuel prices leading to an increase in promotion costs, especially transportation of raw materials Weather constraints, especially for coloring process Limited availability of human resources Total threats Weighted total score
Quality 0,098 0,085 0,071
Rating 4 3 4
Score 0,391 0,257 0,284
0,059 0,071 0,088 0,056 0,068 0,530
4 3 3 4 3
0,237 0,213 0,266 0,225 0,204 2,077
0,074 0,074 0,094
2 2 2
0,148 0,148 0,189
0,101 0,059 1,000
3 3
0,302 0,178 0,964 3,041
_______________________ WORLD TECHNOLOGIES _______________________
36
ENTREPRENEURSHIP MANAGEMENT
EFE total value
High: 3,0– 4,0 Average: 2,0 – 2,99 Low: 1,0– 1,99
IFE total value High: Average: Low: 3,0– 4,0 2,0 – 2,99 1,0– 1,99 I II III IV
V
VI
VII
VIII
IX
Figure 2. The result of company location analysis The position on IE matrix shows that in the internal position, the House of Rolla Junior Batik is strong whereas in the external position, it is medium. This suggests that House has been able to optimize its existing opportunities and minimize its coming threats. The internal positions are in an average performance showing that the existing strengths are able to cover up the weaknesses. Formulation of Selecting Strategy Formulation of alternative strategies was obtained by using SWOT analysis. According to David (2009), an alternative strategy is divided into four, namely, SO strategy (strength-opportunities), WO strategy (weaknesses-opportunities), ST strategy (strengththreats), and WT strategies (weaknesses-threats). The preparation of the strategy on the SWOT matrix which produced 13 alternative strategies in accordance with the internal and external factors to increase competitiveness of Rolla Junior Batik can be seen in Figure 3. Options of strategies are listed by the priority, namely: 1. Capital increase through small loans program (KUR) KUR is a governmental program that assists the development of small, and medium enterprises, and it can provide capital for the SMEs whose development is often hampered because of the difficulty in obtaining the capital. By this program, it can help them to carry out a larger number of production and other activities so that they can support their development. The House of Rolla Junior Batik should strengthen its capital for expansion and increased production. With a substantial capital through KUR program, it may obtain the flexibility to explore both the production and its marketing activities, and finally, it can maintain its existence and continue its development.
2. Market expansion to other areas Business market development can be performed by expanding the business to new areas. Frequently, the community of a local area is so familiar with a product that they become uninterested in the product; therefore, the business requires to expand its business to a new area. Jember Batik which indicates the characteristics of Jember has unique patterns that can be promoted to different areas. Also, Batik becomes a collection item so that it needs to be expanded to other regions to attract its potential customers. The House of Rolla Junior Batik should begin its expansion to the surrounding areas, especially areas that have an interest in batik and have no uniqueness. The expansion is expected to support the development of Jember Batik especially the products of the House of Rolla Junior Batik. 3. Creating a web site/blog to promote, buy and sell products In the globalization era, information technology is growing fast by online, and human depends on technology tools to seek for information, and advertisements are posted online in the internet to attract customers. To answer this challenge, the House of Rolla Junior Batik should create a web/blog to promote the Jember Batik and to buy and sell through online transactions. The blog/website must contain detailed information on the products as well as information of the company, and this is expected to facilitate customers to get an easy access on the information of Rolla Junior Batik products. 4. More frequent participations in EXPO exhibitions both in regional and national levels An EXPO exhibition is a very effective promotional event to promote products. To expand its marketing area, the House of Rolla Junior Batik should increase its frequency in participating in exhibitions so that its products can be promoted in regional and national levels. An EXPO activity is a very effective venue for promoting products and making transactions. In addition, business agreements with suppliers and buyers can be made in this event. 5. Research implementation to overcome obstacles on staining When the rainy season comes, the House of Rolla Junior Batik is unable to meet its customers’ demand. For this reason, it is necessary to find a way to solve this problem so that it can increase its customers’
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FORMULATION FOR DEVELOPING BATIK TULIS
37
satisfaction. Therefore, the House needs to collaborate with research institutions such as universities to solve the problem. Through the faculty projects and student assignments, the activities of this research had been carried out without requiring a large capital, and this is expected to solve the problem of coloring to meet the its customers’ high demand at any season.
integration especially in batik industry. This integration can increase the value of the company due to the optimization of all sectors of the House to achieve production efficiency.
6. Cooperation implementation with raw material suppliers (backward integration)
The raw materials, which come from Pekalongan Central Java, have a high cost due to the transportation cost; as a result, the House of Rolla Junior Batik should look for alternatives to purchase the raw materials. The closer the sources of raw materials is, the less the cost of production is especially the transportation costs, resulting in lower prices of the products being sold.
To ensure the availability and quality of the raw materials, the House of Rolla Junior Batik requires to build a cooperation with its suppliers. This cooperation is expected to be the form of subsystem agribusiness
OPPORTUNITIES-O 1. Existence of the "Go Green" governmental program 2. Existence of small loans with low interest for SMEs 3. Batik promotion batik since it becomes an icon of the current exhibitions of multiple events held annually by the government of Jember Regency 4. Availability of evolving batik market 5. Good quality of raw materials 6. Increasing number of working visits from other local governments. 7. Customer loyalty 8. Good relations with national entrepreneurs
7. The search for alternative suppliers of raw materials, especially in areas closer to the company
STRENGHTS-S 1. Having a good business prospect and friendly environment 2. Having the appropriate promotional methods by actively participating in exhibitions of local excellence products 3. Having a high quality product 4. Having a wide range of marketing 5. Well-organized working atmosphere and mutual cooperation between the employees and managerial team 6. Updating its Batik patterns 7. Having a training facility in producing batik products. 8. Having creativities for innovation (production and marketing)
WEAKNESSES-W 1. Lack of educated human resources 2. Limited knowledge of science and technology 3. Limited working capital 4. Less extensive networking 5. Lack of online marketing
SO STRATEGIES 1. Implementation of environmentally friendly production methods 2. Increase of quantity 3. Participation in EXPO exhibitions both in regional and national levels 4. Strict quality control to maintain the quality of products 5. Expansion to other regions 6. Community of employees and routine activities (gathering, recitals, and etc.) 7. Visits to the center of batik crafts on other areas 8. Sustainability of good relations with the local government of Jember Regency
WO STRATEGIES 1. Increase capital through the small loans program 2. Regular training for employees 3. Scientific development of employees through sharing creative ideas in daily activities 4. Creating a web site/blog to promote, buy and sell products
THREATS-T ST STRATEGIES 1. Level of purchasing power of the 1. Conducting cooperation with society is still low raw material suppliers (backward 2. High cost of raw material supports integration) 3. Increase in fuel prices leading to an 2. Finding alternative suppliers of raw increase in production costs, especially materials, especially those from the transportation of raw materials close areas in Jember 4. Weather constraint especially for 3. Conducting researches to overcome the staining coloring problem which needs sunlight 5. Limited availability of human resources staining 4. Expanding the labor to the community of other areas
WT STRATEGIES 1. Lowering standards of product quality or creating printed batik products for the lower-middle segment of buyers 2. Creating web/blog to promote the products
Figure 3. The result of competitive strategy evaluation
_______________________ WORLD TECHNOLOGIES _______________________
38
Implications of Managerial This study was conducted to formulate the development strategies for the House of Rolla Junior Batik from its internal and external conditions and location of the company. The development strategy is required to maintain the existence of the company to continue its development. The generated strategies in this study are expected to be recommendations for the House to perform the development of the company. The managerial implications in this research include: 1. Capital increase through KUR program can be performed by borrowing from financial institutions that have been set by the government and by preparing the company's profile and financial report of the company. 2. Market expansion can be performed by cooperation in the form of partnerships to promote batik in other areas. The program can be carried out only for limited partnerships on marketing and production process by outlets established in other areas. 3. Creation of a website/blog to promote, buy and sell the products that can be performed by using free websites like BlogSpot or wordpress. The information must clearly state both products and corporate information, and the news should include tourist information on Jember Regency. 4. More frequent participations in EXPO exhibitions both regional and national levels. The House of Rolla Junior Batik must actively seek for information on product exhibitions either via internet or direct information from relevant sources and institutions. 5. Research implementation to overcome the staining problem. The House of Rolla Junior Batik needs to collaborate with research institutions such as universities to solve this problem through the faculty projects and student assignments. 6. Conducting cooperation with raw material suppliers to ensure the availability and quality of the materials. 7. Finding alternative suppliers of raw materials, especially the supplier which is closer to the company to minimize the cost of transportation.
CONCLUSIONS AND RECOMMENDATIONS Conclusions Based on the objectives of this study, it can be concluded that the strategic factor becoming the highest relative importance is the appropriate method of promotion i.e. by actively participating in exhibitions of local
ENTREPRENEURSHIP MANAGEMENT
excellence products. The main weakness of the strategic factors becoming the highest relative importance is the lack of online marketing. In addition, the strategic factor that becomes a chance of the highest relative importance is the governmental "Go Green" program. Finally, the strategic factor that becomes a threat to the highest relative importance is the weather constraint, especially for the coloring process. The House of Rolla Junior Batik is located on quadrant II (Growth and Build), indicating that the external position is strong, and the internal position is in medium level. Therefore, the House can implement the strategy in the form of intensive market development and integration strategy in the form of backward integration. The main strategy priority is the capital improvements through KUR program, and the second strategy priority is to expand the market into other regions of Jember. The third strategy priority is to make a website/blog to promote, buy and sell products, and the fourth strategy priority is more frequent participations in EXPO exhibitions both in regional and national levels. The fifth strategy priority is to conduct research to overcome the staining problem, and the sixth strategy priority is to conduct cooperation with raw material suppliers (backward integration). Finally, the seventh strategy priority is to search for alternative suppliers of raw materials, especially areas closer to the location of the company. Recommendations Suggestions for the House of Rolla Junior Batik are as follows: 1) the House requires to optimize its chain value that covers all of the major and supporting activities. The major activities include the production process and distribution whereas the supporting activities include supports from the financial institutions, local government, raw material transportation services, training and human resource development, and marketing information; 2) to keep the positive trend of the development of batik, the House requires a number of strategies based on the priorities obtained from the results of this study so that the existence of the House to continue its development can be maintained; 3) to improve the competitiveness of the House which is currently in the medium position in the internal factors and strong position in the external ones, it requires to overcome the factors that become the major weaknesses and improve the factors that become the main strengths which have the highest relative importance; 4) the
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FORMULATION FOR DEVELOPING BATIK TULIS
House requires to innovate in terms of production and marketing to maintain its existence in order to continue its development; 5) for further research, indepth research on effective promotional activities and efficient production processes to enhance shareholder values can be conducted.
REFERENCES Adiastuti. 2009. Strategi Pengembangan Pengelolaan Pasar (Studi Kasus Perusahaan Daerah Pasar Tohaga Kabupaten Bogor [tesis]. Bogor: Institut Pertanian Bogor. David FR. 2012. Manajemen Strategis. edisi ke-12. Jakarta: Salemba Empat. Depperindag. 1999. Profil Komoditi Batik, Kanwil Departemen Perdagangan dan Perindustrian Jawa Tengah. Semarang: Depperindag. Marius JA, Sumardjo, Slamet M, Asngari PS. 2007. Pengaruh faktor internal dan eksternal penyuluh pertanian terhadap kompetensi penyuluh di Nusa Tenggara Timur. Jurnal Penyuluhan 3(2): 78–89. Nejad MB, Pouyan N. Shojaee MR. 2012. Appliying topsis and QSPM methods in framework SWOT model: case study of Iran’s Stock Market. Australian Journal of Business and Management Research 1(5):93–103.
39
Pandelaki L. 2012. Strategi pengembangan budidaya rumput laut di pulau Nain Kabupaten Minahasa Utara. Jurnal Perikanan dan Kelautan Tropis 8(2): 52–57. Raf, Mulyadi. 2012. Analisis eksplanatori faktor daya saing industri kecil (sentra pada industri kecil batik di Kota Jambi). Jurnal Manajemen dan Kewirausahaan 14(2):91–101. Soebagiyo, Daryono, Wahyudi M. 2008. Analisis kompetensi produk unggulan daerah pada batik tulis dan cap solo di Dati II Kota Surakarta. Jurnal Ekonomi Pembangunan 9(2):184-197. Soebagiyo. 2011. Strategi pemberdayaan usaha skala kecil batik di Pekalongan. Jurnal Eksplanasi 6 (1):29–45. Sudantoko D. 2010. Pengembangan industri batik skala kecil di zkabupaten dan kota Pekalongan dengan pendekatan Analysis Hierarchy Process (AHP). Jurnal Prestasi 6(1):70–78. Sudirman. 2011. Analisis SWOT untuk menentukan strategi pemasaran dapa Harian Fajar di Makasar. Jurnal Manajemen dan Akutansi 12(2): 185188. Usman YV, Wiwi Y. 2013. Analisis strategi pemasaran perumahan Bekasi Timur Regensi 3. Jurnal Sistem Industri 7(1):83–98. Wispandono, Moch RM. 2010. Pengaruh lingkungan bisnis terhadap kinerja pengrajin industri batik di Kabupaten Bangkalan. Jurnal Mitra Ekonomi dan Manajemen Bisnis 1(2):152–162.
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL AND PROFITABILITY
5
Maman Sumantri*), Bambang Juanda**), and Dwi Rachmina***) PT Coats Rejo Indonesia Jl. Raya Tajur No.24, Bogor, Jawa Barat 16720 **) Department of Economic, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 ***) Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 *)
ABSTRACT The purpose of the research was to find out the effects of rupiah exchange per US dollar, and increase of wages and electricity on the ratio of net working capital and profitability. Descriptive methodology using case-study approach was used in PT XYZ as a producer of sewing thread. Secondary data were collected from January 2009 to June 2014. Monthly data of financial ratios consisting of liquidity ratio, activity ratio, and profitability ratio was analyzed with multiple regressions using Minitab 16. The results showed that rupiah impairment per US dollar could lower the ratio of net working capital and profitability. The increase of wages and electricity would increase the ratio of net working capital, but fortunately it would also increase profitability due to the increase of employees’ productivity and efficient use of electricity. All the free variables insignificantly affect net working capital and profitability. The study also showed that the impairment of rupiah exchange and working capital variables that are measured by receivables age, inventory age, and loan age could influence return on asset. The impairment of rupiah exchange rate, receivables age, and inventory age had a negative impact on the return on asset, while loan age had a positive impact on the return on asset. The impairment of rupiah exchange rate, receivables age, and inventory age had a significant influence on the return on asset so that the company’s management must focus more on anticipating rupiah exchange fluctuation, and management of accounts receivables and inventory. Keywords: net working capital, liquidity ratio, profitability ratio, multiple regression analyses
ABSTRAK Tujuan dari penelitian adalah untuk melihat dampak dari kurs Rupiah per USD, kenaikan biaya upah dan listrik terhadap rasio modal kerja bersih dan profitabilitas. Metode deskriptif dengan pendekatan studi kasus dilakukan pada perusahan PT XYZ sebagai produsen benang jahit. Data sekunder dikumpulkan dari bulan Januari 2009 sampai dengan Juni 2014 dan data bulanan rasio keuangan yang terdiri dari rasio likuiditas, rasio aktivitas, dan rasio profitabilitas dianalisis dengan regresi berganda menggunakan Minitab 16. Hasil penelitian menunjukkan bahwa pelemahan Rupiah terhadap USD akan menurunkan rasio modal kerja bersih dan profitabilitas. Kenaikan biaya gaji dan listrik akan meningkatkan rasio modal kerja bersih, namun secara menguntungkan meningkatkan profitabilitas akibat dari peningkatan produktivitas karyawan dan efisiensi pemakaian listrik. Semua variabel bebas tersebut secara tidak signifikan mempengaruhi modal kerja bersih dan profitabilitas. Studi juga menunjukan bahwa pelemahan kurs Rupiah dan variabel modal kerja yang diukur dengan umur piutang, umur persediaan, dan umur hutang dapat mempengaruhi return on asset. Pelemahan nilai tukar Rupiah, umur piutang dan persediaan mempunyai pengaruh negatif terhadap return on asset, dan umur hutang mempunyai pengaruh positif terhadap return on asset. Pelemahan nilai tukar Rupiah, umur piutang usaha dan persediaan mempunyai pengaruh yang signifikan terhadap return on asset sehingga manajemen perusahaan harus lebih fokus dalam mengantisipasi fluktuasi kurs Rupiah, dan manajemen piutang dan persediaan. Kata kunci: modal kerja bersih, rasio keuangan, rasio likuiditas, rasio profitabilitas, analisis regresi berganda
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
INTRODUCTION Management of working capital is the most important activity in managing a company. A good working capital management can determine the sustainability of the company’s operation (Raheman, 2012). A good working capital management can increase the company’s profitability (Baveld, 2012). A sufficient amount of working capital can ensure the company’s ability to meet day-today expenses, starting with buying the raw materials until the realization of cash income. The time period needed to convert the raw materials into ready materials, and to sell them until cash is obtained is known as operational cycle or cash cycle. An excessive working capital is not good for the company because it shows that there are some unproductive funds embedded in the current assets. On the other hand, working capital deficit will show the company’s liquidity problem. Whether the company’s financial condition is healthy or not depends on the working capital effectiveness (Pham 2013; Rehn 2012). The final objective of the company is to increase the shareholders’ assets by increasing the company’s profit. However, increase of profit without paying attention to the company’s liquidity will endanger the company itself. Achievement of the highest sales, when it is not accompanied by a good receivable management, will make the company overtrading. The company will face conditions where in a certain period of time it cannot make billing because of a breakdown in the payments from the customers so that it cannot pay off their shortterm liabilities, and thus it will disrupt the company’s activities. Therefore, it is important for the company to accelerate conversion cash cycle in order to improve cash holding (Zhang, 2011). The terms ‘Cash is the king’ is a central element in every company’s operational cycle. (Finau, 2011). Miswanto (2012) states that in managing working capital there are two key elements in determining the optimal current asset level, namely liquidity matter and trade-off between profitability and risk. To determine the amount of optimal current assets is to look for the balance between the adequate liquidity the company wants and the profit the company expects.
41
In preparing the budget for working capital and the target for profit, the company’s management also considers macro economic factors, such as inflation rate and rupiah exchange rate towards US dollar. The inflation rate is used to plan production cost, sales cost and administration fees. Rupiah exchange towards US dollar will be used to convert the revenue, the cost and the scale. The increase of minimum wages and electricity rates carried out by the government is a factor that can contribute to inflation. Due to the increase of production cost, the company will adjust the prices by increasing the sales price. From demand point of view, the increase of sales price will lower demand, which later on will affect the company’s production level. Rupiah exchange fluctuation towards US dollar also affects business very much because the company makes a transaction using rupiah and dollar currencies, whereas the financial report uses US dollar currency. Fluctuation of rupiah exchange towards US dollar can hardly be avoided, and it can cause fluctuation of net working capital. However, by anticipation and a good financial management, the risk can be minimized. Mehtab (2013) says that the influence of exchange fluctuation very much affects the company’s profitability level. The objectives of the research are as follows: 1. To analyze the influence of rupiah exchange per US dollar, increase of wages and electricity on the company’s net working capital and profitability. 2. To analyze the influence of rupiah exchange per US dollar and the working capital component such as receivables age, inventory age and loan age on the return on asset. 3. From the analyses of the factors, there comes an input about how to optimalize working capital so that the company’s profitability can increase. PT XYZ is a company that produces sewing thread as raw materials for garment and shoe companies. The scope of the research includes the influence of rupiah exchange, increase of wages and electricity on the ratio of net working capital and business profit margin. The influence of fluctuation of rupiah exchange and working capital components, namely receivables age, inventory age and loan age will be tested against the return on asset.
_______________________ WORLD TECHNOLOGIES _______________________
42
ENTREPRENEURSHIP MANAGEMENT
METHODS The research was carried out using a descriptive method and a case-study approach. The analysis of financial ratios includes liquidity ratios, namely net working capital to sales, activity ratio and profitability ratio using secondary data from January 2009 to June 2014. Monthy data was analyzed with multiple regression equation using Minitab 16. The research would give us a picture of how rupiah exchange per US dollar, increase of wages and electricity could influence cost, income and net working capital of the company, and could give input to the company in dealing with optimal working capital management so that it could improve profitability. Figure 1 is the frame of the research conceptual thought. Regression Model Multiple regression model was made with the assumption that the dependent variable (response) Y is a linear function of several independent variables X1, X2,…,Xk, and the rest component ℮ (error) (Juanda, 2009). Model 1 and model 2 were used in this research to test the influence of the independent variables i.e. rupiah exchange fluctuation, electricity cost, raw materials cost, maklon service cost, local sales price, export sales price, local sales volume, export sales volume, previous net working capital and previous
business profit margin on the net working capital and business profit margin. Model 3 was used in this research to test the influence of rupiah exchange fluctuation per US dollar, receivables age, inventory age and loan age, and the previous ROA on the current ROA. Model 1 Yt = a + b1X1 + b2X2 + b3X3 + b4X4 + b5X5 + b6X6 + b7X7 + b8X8 + b9X9 +b10Yt-1 + ℮ in which: Y = Ratio of net working capital to sales (%) a = Constanta X1 = Rupiah exchange per US dollar (Rp) X2 = Wage per capita per month (thousand Rp) X3 = Electricity cost per Kwh (Rp) X4 = Average of raw materials per Kg ($US) X5 = Average of maklon service cost per Kg ($US) X6 = Average of local sales price per Kg ($US) Average of export sales price per Kg ($US) X7 X8 = Local sales volume growth from the previous preiod (%) X9 = Export sales volume growth from the previous period (%) Yt-1 = Net working capital ratio to previous sale (%)
External factors Rp/USD exchange rate, wage and electricity cost
Post of income and cost
Production cost
Working capital: current assets and current liabilities
Working capital analysis
Profitability
Managerial implication
Figure 1. Research framework
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
Model 2 Yt = a + b1X1 + b2X2 + b3X3 + b4X4 + b5X5 + b6X6 + b7X7 + b8X8 + b9X9 + b10X10 + b11Yt-1 + ℮ in which: Y = Current business profit margin (%) a = Constanta X1 = Rupiah exchange per US dollar (Rp) X2 = Wage per capita per month (thousand Rp) X3 = Electricity cost per Kwh (Rp) X4 = Average of raw material price per Kg ($US) X5 = Average of maklon service cost per Kg ($US) X6 = Average fluctuation of local sales price per Kg from previous period (%) Average fuctuation of export sales price per X7 Kg from previou period (%) X8 = Local sales volume growth from previous period (%) X9 = Export sales volume growth from previous period (%) X10 = Ratio of net working capital to previous period (%) Yt-1 = Business profit margin of previous period (%) Model 3 Yt = a + b1X1 + b2X11 + b3X12 + b4X13+ b5Yt-1 + ℮ in which: Y = ROA is business profit ratio to total asset (%) a = Constanta X1 = Fluctuation of rupiah exchange rate per $US (%) X11 = Receivables age (day) X12 = Inventory age (day) X13 = Loan age (day) Yt-1 = Previous ROA period (%) The statistical analysis was used to analyze the influence of independent variables such as rupiah exchange rate, wage cost and electricity cost on the dependent variable i.e. net working capital ratio to sale. The statistical analyses was also used to analyze the influence of independent variables i.e. rupiah exchange,
43
wage cost, and electricity cost on the business profit margin. Furthermore, the statistical analyses was used to analyze the influence of rupiah exchange fluctuation and working capital management variable such as receivables age, inventory age and loan age on the return on asset. The statistical hypothesis for testing is as follows: H0 : b = 0 (no variable influence – variable tested on net working capital, business profit margin and return on asset). H1 : b ≠ 0 (influence of rupiah exchange per US dollar, wage cost, and electricity cost on net working capital ratio). H1 : b ≠ 0 (influence of rupiah exchange per US dollar, wage cost, electricity cost on business profit margin). H1 : b ≠ 0 (influence of rupiah exchange per US dollar, receivables age, inventory age and loan age on the return on assets). Multicolinerity Test This test was used to see whether in the regression model there was a correlation among independent variables. A good regression model should have no correlation among independent variables (no multicolinerity). If VIF of classical assumption test results were between 1 and 10 there would be no multicolinerity (Sujarweni, 2014). If VIF was higher than 5 or 10, there would be multicolinerity in the model (Iriawan and Astuti, 2006). Autocorrelation Test To detect the existence of autocorrelation, graphical methods or Durbin-Watson test could be used (Juanda, 2009). Durbin-Watson value was then compared to d-Tabel value. The results showed the following criteria: 1. If 4-dl < DW < 4; resist H0; negative autocorrelation. 2. If 4-du < DW < 4-dl; uncertain, try another test. 3. If du < DW < 4; accept H0. 4. If dl < DW < du; uncertain, try another test. 5. If 0 < DW< dl; resist H0; positive auto-correlation. Gujarati and Porter (2010), Dubi Watson test could not be used if there is a lagged dependant variable so the Durbin H needs to be done using the formula h ≈ ρ [n/ (1-n Var bj)]1/2. The h critical value on 5 % significancy is -1,96 dan 1,96.
_______________________ WORLD TECHNOLOGIES _______________________
44
ENTREPRENEURSHIP MANAGEMENT
RESULTS
analyses with multiple linear regresions were used with statistic software of Minitab 16.
From Figure 2 it can be seen that rupiah exchange per US dollar fluctuated from January 2009 and weakened until mid 2011. It then recovered until 2013. In January 2014 it weakened again until June 2014. The average wage cost kept improving due to the government policy on minimum wages. However, the average of electricity cost looked stable in spite of a policy on the increase of basic electricity cost. The ratio of net working capital kept improving, but business profit margin and return on asset showed a stable trend. The increase of net working capital was due to the improvement of liquidity in the form of deposits in the main company. In line with the liquidity improvement, the cash conversion cycle also accelerated due to the improvement of business loan age compared to receivables age and inventory age. The influence of Rupiah Exchange, Wage Cost and Electricity Cost on the Net Working Capital Ratio The test to see the influence of rupiah exchange per US dolar, wage cost and electricity cost on net working capital ratio was carried out by analyzing the data for 66 months from January 2009 to June 2014. The statistical
Based on the data processed for 66 months, a regression equation can be obtained as follows: Yt = 681 – 0,0041 X1 + 0,0053 X2 + 0,068 X3 + 47,2 X4 + 61,7 X5 – 25,2 X6 + 3,1 X7 – 3,25 X8 – 1,47 X9 + 0,775 Yt-1 The regression equation showed that the weakening rupiah exchange per US dollar for 1 rupiah would lower the ratio of net working capital to sale as much as 0,0041%. The increase of wage cost per month for Rp. 1,000 would increase the ratio of net working capital as much as 0,0053%. The increase of electricity cost for 1 rupiah per Kwh would increase the ratio of net working capital as much as 0,068%. The average increase of raw materials price for every 1 US dollar increase per Kg will influence the increase of the net working capital ratio to sales as much as 47,2%. The increase of maklon service cost for 1 US dollar per Kg would increase the ratio of net working capital to sales as much as 61,7%. All the increase of production cost would increase the basic price of production that would increase the supply value.
Trend of Rp/USD Exchange Rate and Electricity Cost
Trend of Wage Trend (Rp)/labor
Trend of Net Working Capital, Profit Margin and ROA
Trend of Credit, Inventory and Liabilities Age
Figure 2. Tren of dependent and independent variables
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
From the viewpoint of sales, the regression equation showed an average increase of local sales price for 1 US dollar per Kg would reduce the ratio of net working capital to sales as much as 25,2%. However, every average increase of export sales price for 1 US dollar per Kg would increase the ratio of net working capital as much as 3,1%. The growth of local sales volume from the previous period for 1% would reduce the ratio of net working capital as much as 3,25%. The growth of export sales volume from the previous period for 1% would lower the ratio of net working capital as much as 1,47. The ratio of net working capital of the previous period would also influence the ratio of net working capital of the current period where every 1% increase of the previous net working capital would increase the ratio of the current net working capital as much as 0,775%. Regression analysis of net working capital show in Table 1. From Table 1 shows that the regression results for the dependent variable of net working capital can be interpreted as follows: • 75,1% of the net working capital ratio variable can be explained by ten independent variables. • Durbin-Watson test value as much as 1,96334 and
45
Durbin H test value as much as 0,310 is between -1,96 dan 1,96 can be concluded to have no autocorrelation. • Table ANOVA identifies that the F test = 16,63 with P-value 0,000 is smaller than α=0,05, so that the independent variables simultaneously give a significant influence on the dependent variable, so it can be comcluded that the regression is feasible. • With the F test, hypothesis test H0: b1=b2=b3=b4=b5= b6=b7=b8=b9=b10=0 on H1: at least one of b≠0, shows that the regression coefficient is not the same as nil and the P-value = 0,0000 is smaller than α=0,05, which means that H0 is resisted and H1 is accepted. • The Variance Inflation Factor (VIF) value from the regression model for rupiah exchange variable, wage cost, electricity cost, raw material price, maklon service cost, local sales price, local sales volume growth, export sales volume growth, and previous net woking capital ratio is below 10 each so that it shows that there is no multicolinerity among the independent variables. However, the export sales price shows there is a multicolienrity with the VIF value as much as 10,296 and the T value is very small (0,07) so the effect is very significant.
Table 1. Regression analysis of net working capital Predictor Constant X1 X2 X3
Coef 680,6 -0,00413 0,0053 0,0685
X4 X5 X6 X7 X8 X9 Yt-1
47,22 61,71 -25,21 3,12 -3,2531 -1,4657 0,775 S = 74,0052
Source Regression Residual Error Total
DF 10 55 65
SE Coef 318,4 0,01891 0,03626 0,292
T 2,14 -0,22 0,15 0,23
50 0,94 64,79 0,95 21,13 -1,19 47,76 0,07 0,5893 -5,52 0,1964 -7,46 0,108 7,18 R-Sq = 75,1% Analysis of Variance SS MS 910,925 91,093 301,222 5,477 1,212,147 Durbin-Watson statistic = 1,96334
P 0,037 0,828 0,884 0,815
VIF 4,684 5,727 5,865
0,349 4,988 0,345 3,457 0,238 3,809 0,948 10,296 0.000 1,267 0.000 1,498 0.000 2,58 R-Sq(adj) = 70,6% F 16,63
P 0.0000
_______________________ WORLD TECHNOLOGIES _______________________
46
ENTREPRENEURSHIP MANAGEMENT
From the statistical analyses it can be concluded that rupiah exchange, wage cost, electricity cost can influence the net working capital ratio. The influence of rupiah exchange per US dollar with the T value as much as 0,22 and the P value 0,828 is not really significant. The negative effect of weakening rupiah exchange on the net working capital ratio is not significant due to the small value of rupiah in the net working capital, at the average of 15% of the total working capital value (Table 2). The effect of wage cost with the T value as much as 0,15 and the P value 0,884 is not significant. Similarly the increase of electricity cost with the T value as much as 0,23 and the P value 0,815 is not significantly affective. In Table 3 it can be seen that the wage cost portion is only 4% of the total production cost and the electricity cost is 1%, and thus the influence is not significant. The Influence of Rupiah Exchange, Wage Cost, and Electricity Cost on Business Profit Margin From the data processed for 66 months the following regression equation can be obtained: Yt = -16,0- 0,000558 X1 + 0,00211 X2 + 0,00876 X3 – 1,15 X4 – 1,25 X5 + 0,146 X6 + 0,115 X7 + 0,0663 X8 – 0,0142 X9 - 0,00489 X10 + 0,477 Yt-1 From the regression equation it can be assumed that eleven independent variables can influence business profit margin. The profitability ratio regression shows
that weakening rupiah exchange per US dollar as much as 1 rupiah will reduce the business profit margin as much as 0,000558 %. The effect of wage cost shows that the increase of wage cost for Rp. 1000 will increase the business profit margin as much as 0,00211%. The influence of electricity cost per one rupiah per Kwh will increase the business profit margin as much as 0,00876%. The influence of average increase of raw material price as much as 1 US dollar per Kg will reduce the business profit margin as much as 1,15 %. The increase of maklon service cost as much as 1 US dollar per Kg will reduce the business profit margin as much as 1.25 %. From the sales point of view, the regression equation shows that the average increase of previous local sales price for 1% will increase business profit margin as much as 0,146% (Table 4). whereas every increase of 1% of average export sales price will increase business profit margin as much as 0,115%. One percent growth of local sales volume from the previous period will increase business profit margin as much as 0,0663%, but one percent growth of export sales volume from the previous period will reduce business profit margin as much as 0,0142%. The ratio of previous net working capital also influences current business profit margin, where one percent of each increased ratio of previous net working capital will reduce current business profit margin as much as 0,00489%. Previous business profit margin as much as 1% will increase current business profit margin as much as 0,477%.
Table 2. Net working capital ( .000 USD) Net working capital
Jun 2014
%
Des 2013
%
Des 2012
%
Des 2011
Des 2010
%
%
Des 2019
% 16
Rp
4.917
8
6.187
12
6.934
13
7.500
18
8.721
24
4.228
USD
53.458
92
47.259
88
46.119
87
34.202
82
28.364
76
21.410
84
58.375
100
55.445
100
53.053
100
41.701
100
37.085
100
25.638
100
Table 3. wage cost and electricity ( .000 USD) Cost of
Jan-Jun 2014
%
2013
%
2012
%
2011
%
2010
%
2019
%
Production
3.7263.567
100
78.933.654
100
81.214.720
100
67.733.114
100
58.423.195
100
42.147.116
100
Wage
1461803
4
2796747
4
2.106.753
3
2.038.197
3
1.725.389
3
1.223.061
3
Electricity
540071
1
1063625
1
1.032.925
1
1.062.382
2
983.255
2
692.446
2
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
Table 4 shows that regression results for independent variables of business profit margin can be interpreted as follows: • 56,9% of the bsiness profit margin can be explained by eleven independent variables. • Durbin-Watson test value as much as 2,09152 and Durbin H test value as much as -1,206 between -1,96 dan 1,96 shows that there is no auto-correlation. • Table ANOVA identifies that the F test = 6,47 with the P-value 0,000 is smaller than α=0,05, meaning the independent variables give significant impacts simultaneously on the dependent variable, and it can be concluded that the regression is feasible. • The VIF value of the regression model for all independent variables below 10 each show there is no multicolinerity among independent variables. • Using the F test, the hypotheses H0:b1=b2=b3=b4=b =b6=b7=b8=b9=b10=b11=0 towards H1: at least one 5 of b≠0, shows that the regression coefficient is not the same as nil and the P-value=0.0000 is smaller than α=0.05, meaning that H0 is resisted and H1 is accepted. From the statistical analyses it can be concluded that rupiah exchange, wage cost, and electricity cost can influence business profit margin. The influence of rupiah exchange per US dollar with the T value 0,98
47
and the P value 0,329 is not significant. Net working capital portion in rupiah is at the average 10% of the total working capital (Table 2), so 1% weakening rupiah per US dollar will give influence as much as 0,15%. The influence of wage per capita increase with the T value as much as 1,73 and the P value 0,09 is not significant. The influence of electricity cost increase with the T value as much as 0,95 and the P value 0,344 is not significant. The positive impacts of the increase of wage cost and electricity cost on business profit margin will happen because of the increase of employees’ productivity and the efficiency of electricity utilization as can be seen in Table 5. Influence of Rupiah Exchange and Working Capital on Return on Asset From the results of regression analysis, independent variables of rupiah exchange fluctuation per US dollar, receivables age, inventory age and loan age, and the previous ROA period towards ROA dependent variable, the following equation can be obtained: Y = 7,35 – 0,0438 X1 – 0,0142 X11 – 0,00608 X12 + 0,00095 X13 + 0.319 Yt-1
Table 4. Regression analysis of business profit margin Predictor Constant X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 Yt-1
Coef -16,03 -0,00056 0,002106 0,008765
-1,15 -1,251 0,14604 0,1155 0,06627 -0,01424 -0,00489 0,4774 S = 2,52527
Source Regression Residual Error Total
DF 11 54 65
SE Coef 14,54 0,000567 0,001221 0,00918
T -1,1 -0,98 1,73 0,95
1,239 -0,93 1,871 -0,67 0,09318 1,57 0,05331 2,17 0,0205 3,23 0,0063 -2,26 0,003283 -1,49 0,1171 4,08 R-Sq = 56,9% Analysis of Variance SS MS 453,809 41,255 344,359 6,377 798,167 Durbin-Watson statistic = 2,09152
P 0,275 0,329 0,09 0,344
VIF 3,615 5,576 4,979
0,357 2,632 0,507 2,477 0,123 1,179 0,035 1,522 0,002 1,317 0,028 1,324 0,142 2,048 0,000 1,69 R-Sq(adj) = 48,1% F 6,47
P 0,000
_______________________ WORLD TECHNOLOGIES _______________________
48
ENTREPRENEURSHIP MANAGEMENT
Each one percent weakening rupiah will reduce ROA as much as 0,0438%. The T value as much as 2,45 and the P value 0,017 so that the weakening rupiah exchange can give a significant impact on the ROA. Table 6 gives an illustration that weakening rupiah exchange per US dolar as much as 1% will reduce the total assets as much as 0,18% and reduce business profit margin as much as 10% so that overall it will reduce ROA significantly. Receivables age gave a negative impact on the ROA. The increase of receivables age for one day would reduce ROA 0,0142%. The T value as much as 4,02 and the P value 0,000 gave a very significant influence. The increase of receivables age caused a risk that the accounts receivables would be greater, and thus would reduce the company’s profit. Evry one day increased time would reduce ROA as much as 0,00608%. The T value as much as 2,29 and the P value 0,026 would give a significant impact. The higher the inventory value indicated the unproductive use of the stored fund due to unsold inventory, and thus had a potential decline in the inventory quality. The provision cost for inventory quality decline would reduce the company’s profit.
The increase of business loan age for one day would increase ROA as much as 0,00095%. The T value as much as 0.4 and the P value 0,688 would have no significant effect. If the accounts payable could be put off any longer, there would be a chance to get payment from the customers, and thus the company would not need to propose a loan. The increase of previous ROA for 1% would increase the current ROA as much as 0,319 %, the T value as much as 3,36 and the P value 0,001, so the the impact would be very significant. Table 7 shows that the regression results for the dependent variable ‘return on asset’ can be interpreted as follows: • 64,8% of return on asset variable can be explained by variables of rupiah exchange, receivables age, inventory age and loan age, and previous ROA. • Durbin-Watson test value as much as 1,78106 and Durbin H test value as much as -1,206 between -1,96 dan 1,96 can be concluded that there is no auto-correlation. • Table ANOVA identifies that the regression equation with the F test = 22,09 where the P-value was 0,000 smaller than α=0,05, so the independent variables simultaneously give significant impacts on the dependent variable, and thus it can be concluded that the regression is feasible.
Table 5. Employees’ productivity and efficiency of electricity cost Description Volume produksi (kg) Number of workers Productivity (Kg/orang) Kwh Productivity (Kg/kwh)
Jan - Jun 2014 3.250.625 4.335 749,86 7.135.732 0,46
2013 6.421.514 8.591 747,47 13.557.368 0,47
2012 5.774.950 8.528 677,18 12.983.822 0,44
2011 5.344.699 8.383 637,56 12.575.198 0,43
2010 5.348.680 7.712 693,55 13.276.180 0,4
2009 3.930.950 7.009 560,84 9.925.210 0,4
Table 6. The influence of rupiah exchange fluctuation per US Dollar on the total assets and business profit Description Monetary assets (Rp portion) Total assets Ratio of monetary asset on total assets Rp depreciation on US dollar Decrease of monetary asset value (Rp portion) Effect of Rp depreciation on total asset Business profit Effect of Rp depreciation on business profit
Units (thousands) US dollar US dollar
US dollar US dollar
2014 Jun 17,668 97,118 18% 1% 176,68 0,18% 1,766 10%
2013 Dec 18,696 96,688 19% 1% 186,96 0,19% 1,905 10%
2012 Dec 17,398 94,671 18% 1% 173,98 0,18% 2,573 7%
2011 Dec 11,717 11,717 14% 1% 117,17 0,14% 1,816 6%
2010 Dec 11,521 62,155 19% 1% 115,21 0,19% 1,853 6%
2009 Dec 8,127 50,029 16% 1% 81,27 0,16% 1,334 6%
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
• Using the F test, the hypothesis H0:b1=b2=b3=b4=b5=0 towards H1: at least one of the b ≠ 0, shows that the regression coefficient is not the same as nil and the P-value = 0,0000 is smaller than α=0,05. This means that H0 is resisted and H1 is accepted. This also means that all variables simultaneously affect the dependent variable significanly. • The Variance Inflation Factor (VIF) value for variables of receivables age, inventory age, loan age, and previous business profit margin is below 10 each so that it shows that there is no multicolinerity among the independent variables. Managerial Implications From the research it is found out that weakening rupiah exchange rate will reduce the net working capital ratio. The biggest contribution for the exchange gap happens because of the high rate of the valueadded tax of accounts receivables. To reduce impacts from weakening rupiah exchange, the company must accelerate the value-added tax of accounts receivables to the government by proposing the low risk facility so that it can accelerate restitution from 15 months to 3 months. The increase of minimum wages can minimize the impacts by optimalizing the workers’ number and improving the productivity by increasing the labour working hours. Efficiency on the increase of other labour costs due to the increase of minimum wages must be carried out especially in the health cost aspect.
49
The scheme for reimbursing the health cost on the bases of modified main wage must be changed according to BPJS program so that it can reduce health cost significantly. To anticipate the impacts of electricitybase-cost, the company must be efficient in electricity usage. To accelerate receivables age, the company must carry out administrative steps by accelerating goods delivery and invoice, avoiding invoicing error, increasing communication with customers, coordinating well with sales division and credit control, and delivering the list of credit due date to customers. To accelerate inventory age, the company must be able to manage inventory appropriately according to the needs and safe inventory level. Accuracy in making sales projection can eliminate excess supply. To increase sales accuracy projection, the company muct carry out intensive communication with customers so that it can monitor the present market condition. Production control using lean manufacturing will increase efficiency in using materials. To extend the debt terms, the company must get longer payment terms. Cooperation with suppliers and banks can be carried out by making an agreement of Non Recourse Discounting (NRD) on the balance of debt so that the suppliers can get payment according to the due date, but the company will have a longer time to pay off their liabilities to the bank.
Table 7: Regression analysis of return on asset Predictor Constant X1 X11 X12 X13 Yt-1
Coef 7,352 -0,04385 -0,014218 -0,006082 0,000951
0,31852 S = 0,303610
Source Regression Residual Error Total
DF 5 60 65
SE Coef 1,848 0,01787 0,003535 0,002661 0,002354
T 3,98 -2,45 -4,02 -2,29 0,40
0,09476 3,36 R-Sq = 64,8% Analysis of variance SS MS 10,1805 2,0361 5,5307 0,0922 15,7113 Durbin-Watson statistic = 1,78106
P 0,000 0,017 0,000 0,026 0,688
VIF 1,131 2,145 3,474 3,994
0,001 1,594 R-Sq (adj) = 61,9% F 22,09
P 0,0000
_______________________ WORLD TECHNOLOGIES _______________________
50
CONCLUSIONS AND RECOMMENDATIONS Conclusions Weakening rupiah exchange will give a negative impact on the net working capital, business profit margin, and return on asset. The company’s financial report using functional currency of US dollar will be influenced by the fluctuation of rupiah per US dollar. The result of this research is in line with the result of the research conducted by Huang and Vlady (2012), i.e. the translation to functional currency will give positive impacts in terms of accounting and economy. The impact of translating the financial report to functional currency will give a profit as well as loss difference fron the exchange rate gap. In line with the research result of Mehtad (2013), exchange rates will influence the company’s profitability. The effect of wage cost and electricity cost on the ratio of the net working capital is positive. Wage cost and electricity cost are production cost that can add the value of inventories. The effect of the increase of production cost and electricity cost on the company’s profit margin is positive, because of the employees’ increased productivity and efficiency of electricity usage. The effect of both variables on the ratio of net working capital and business profit margin is not significant. Business receivables age and inventory age do not give a significant impact on the ROA. However, business loan age has an insignificantly positive impact on the ROA. By accelerating invoicing, minimizing inventory value and slowing down payment to suppliers, the company can improve its performance. Negative relationship between net working capital and profitability shows that managing working capital more efficiently will improve the company’s profitability. The result of this research is in line with that carried out by Alipour (2011), Rahman (2011), Sutanto and Pribadi (2012), Manzoor (2013), Mekonnen (2011), Mengesha (2014), and Juliansyah (2009). The negative relationship between receivables age and profitability shows that accelerating the accounts receivables will improve cash holding and thus improve the company’s performance. This is in line with the research conducted by Ray (2012), Vural, Sokmen, and Cetenak (2012). The negative impact of receivables
ENTREPRENEURSHIP MANAGEMENT
age on profitability is not in line with the research result found by Agyei and Yeboan (2011). The negative impact of inventory age on profitability shows that eliminating supply will push more sales so that inventory investment will become more efficient. The negative impact of inventory on profitability is in line with the research result found by Ching et al. (2011), Raheman et al. (2010), and Quayyum (2011). Recommendations From the results of this research it can be seen the significant impact of local and export sales volume on the ratio of net working capital and the significant impact of export sales price and local sales volume on profitability). However, the increased volume of export sales will reduce overall business profit margin. The company’s management must be able to increase volume of local sales and propose a request to increase export sales price to the company group. The company’s management can minimize the risk of weakening rupiah exchange per US dollar by pulling down (bringing down) monetary asset balance so that the effect of translation to the reporting currency can be minimized.
References Agyei SK. Yeboah B. 2011. Working capital management and profitability of banks in Ghana. British Journal of Economics, Finance and Management Sciences 2(2): 48–125. Alipour, M. 2011. Working capital management and corporate profitability: evidence from Iran. World Applied Sciences Journal 12 (7): 1093–1099. Baveld MB. 2012. Impact of working capital management on the profitability of public listed firms in the Netherlands during the financial crisis [tesis]. Enschede: University of Twente. Ching HY, Novazzi A, Gerab F. 2011. Relationship between working capital management and profitability in Brazilian listed companies. Journal of Global Business and Economics 3(1): 23–44. Finau FKM. 2011. The impact of working capital management dynamics on performance of Tongan enterprises in New Zealand [tesis]. New Zealand: Unitec Institute of Technology.
_______________________ WORLD TECHNOLOGIES _______________________
THE INFLUENCE OF RUPIAH, INCREASE OF WAGES AND ELECTRICITY ON WORKING CAPITAL...
Gujarati DN, Porter DC. 2010. Essentials of Econometrics. Fourth Edition. New York: McGraw Hill International. Huang A. Vlady S. 2012. The Accounting and economic effects of currency translation standards: AASB 1012 vs. AASB 121. Journal of Modern Accounting and Auditing 8(11): 1601–1610. Iriawan N, Astuti SP. 2006. Mengolah Data Statistik Dengan Mudah Menggunakan Minitab 14. Yogyakarta: Andi. Juanda B. 2009. Ekonometrika Permodelan dan Pendugaan. Bogor: IPB Press. Juliansyah S. 2009. Analisis persediaan dan piutang usaha dalam manajemen modal kerja dan dampaknya terhadap profitabilitas (studi kasus: PT XYZ Indonesia) [tesis]. Bogor: Institut Pertanian Bogor. Manzoor H. 2013. Working capital management and profitability: evidence from cement sector of Pakistan, listed on Karachi stock exchange. Journal of Business Administration and Management Sciences Research 2(10): 215– 223. Mehtab F. 2013. Foreign exchange risk management at infosys limited. VSRD International Journal of Business and Management Research 3(4): 121–126. Mekonnen M. 2011. The impacts of working capital management of firm’s profitability [tesis]. Addis Ababa: Addis Ababa University. Mengesha W. 2014. Impact of working capital management on firms’ performance: the case of selected metal manufacturing companies in Addis Ababa, Ethiopia [tesis]. Jimma: Jimma University. Miswanto. 2012. Kebijakan dalam penentuan dan pendanaan modal kerja perusahaan. Jurnal Economia 8(2): 12–22. Pham NL. 2013. Effective working capital management in small and medium enterprises in Vietnam [tesis]. Vietnam: Dublin Business School.
51
Quayyum ST. 2011. Effects of working capital management and liquidity: evidence from the cement Industry of Bangladesh. Journal of Business and Technology (Dhaka) 6(1):37–47. Rahman MM. 2011. Working capital management and profitability: a study on textiles industry. ASA journal 5(1): 115–132. Raheman A. 2012. Analyzing the working capital management and productivity growth of manufacturing sector in Pakistan [disertasi]. Islamabad: Comsats Institutes of Information Technology Raheman A, Afza T, Qayyum A, Bodla MA. 2010. Working capital management and corporate performance of manufacturing sector in Pakistan. International Research Journal of Finance and Economics 47: 151–163. Ray S. 2012. Evaluating the impact of working capital management components on corporate profitability: evidence from Indian manufacturing firms. International Journal of Economic Practices and Theories 2(3): 2247 – 7225. Rehn E. 2012. Effect of working capital management on company profitability an industry-wise study of Finnish and Swedish public companies [tesis]. Helsink: Hanken School of Economics. Sujarweni VW. 2014. SPSS Untuk Penelitian. Yogyakarta: Pustaka Baru Press. Sutanto JE, PribadiY. 2012. Efficiency of working capital on company profitability in generating ROA (case studies in CV. tools box in Surabaya). Journal of Economics, Business, and Accountancy Ventura 15(2): 289 – 304. http:// dx.doi.org/10.14414/jebav.v15i2.81. Vural G, Sokmen AG, Cetenak EH. 2012. Affects of working capital management on firm’s performance: evidence from Turkey. International Journal of Economics and Financial Issues 2(4): 488–495. Zhang J. 2011. The relationship between working capital management and the corporate cash holding [tesis]. Finland: University of Eastern Finland.
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS APPROACH
6
Fauzi Ridwansyah*)1, Rina Oktaviani**), and Imam Teguh Saptono***) PT. Indosat, Tbk Jl. Medan Merdeka Barat No. 21, Gambir, Jakarta Pusat 10110 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) PT. Bank BNI Syariah Jl. Menteng Raya No.29 Jakarta Pusat *)
ABSTRACT Mobile payment is an industry's response to global and regional technological-driven, as well as national social-economical driven in less cash society development. The purposes of this study were 1) identifying positioning of PT. Indosat in providing a response to Indonesian mobile payment market, 2) analyzing Indosat’s internal capabilities and business model fit with environment turbulence, and 3) formulating the optimum mobile payment business model development design for Indosat. The method used in this study was a combination of qualitative and quantitative analysis through in-depth interviews with purposive judgment sampling. The analysis tools used in this study were Business Model Canvas (MBC) and Ansoff’s Strategic Diagnosis. The interviewees were the representatives of PT. Indosat internal management and mobile payment business value chain stakeholders. Based on BMC mapping which is then analyzed by strategic diagnosis model, a considerable gap (>1) between the current market environment and Indosat strategy of aggressiveness with the expected future of environment turbulence level was obtained. Therefore, changes in the competitive strategy that need to be conducted include 1) developing a new customer segment, 2) shifting the value proposition that leads to the extensification of mobile payment, 3) monetizing effective value proposition, and 4) integrating effective collaboration for harmonizing company’s objective with the government's vision. Keywords: business model canvas, indosat, mobile payment, less cash society, strategic diagnosis
ABSTRAK Mobile payment adalah sebuah respon industri terhadap dorongan teknologi global maupun regional, serta dorongan ekonomi nasional berupa pembentukan Masyarakat Non Tunai. Tujuan penelitian ini adalah 1) mengidentifikasi positioning PT. Indosat dalam memberikan respon terhadap pasar mobile payment di Indonesia, 2) menganalisis kesesuaian kapabilitas internal dan model bisnis mobile payment Indosat dengan turbulensi lingkungan, 3) memberikan rancangan pengembangan model bisnis mobile payment yang optimal bagi Indosat. Metode yang digunakan dalam penelitian ini adalah kombinasi analisis kualitatif dan kuantitatif melalui wawancara mendalam kepada narasumber ahli yang ditentukan secara purposive judgement sampling. Alat analisis yang digunakan dalam penelitian ini adalah Model Bisnis Kanvas (MBK) dan Strategic Diagnosis Ansoff. Narasumber penelitian adalah perwakilan manajemen internal PT. Indosat dan pihak-pihak pemangku kepentingan di dalam rantai nilai dasar bisnis mobile payment. Berdasarkan pemetaan MBK yang kemudian dianalisis dengan model strategic diagnosis menghasilkan adanya gap yang cukup jauh (>1) antara lingkungan pasar saat ini dan agresifitas strategi Indosat dengan tingkat turbulensi lingkungan masa depan yang diharapkan. Oleh karena itu, perubahan strategi kompetitif yang perlu dilakukan adalah 1) membentuk segmen pelanggan baru, 2) melakukan pergeseran proposisi nilai yang mengarah kepada ekstensifikasi mobile payment, 3) monetisasi proposisi nilai yang efektif, dan 4) kolaborasi terpadu yang efektif untuk menyelaraskn tujuan perusahaan dengan visi pemerintah. Kata kunci: model bisnis kanvas, mobile payment, Indosat, masyarakat non tunai, strategic diagnosis 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS...
INTRODUCTION The rapid progress of Information and Technology (IT) and globalization have a considerable influence on the economic system, including the non-cash payment system. Indonesia is still lagging behind in access to the financial products or services where only 20% of Indonesian adults have access to formal financial services from the financial institutions. In order to increase non-cash micro payment instruments, which are designed to serve small-value payments with high frequency usage and very-fast payment process, e-money is the most appropriate instrument to use today (Hidayat et al, 2006). According to International Telecommunication Union (ITU, 2014), the statistical data of Indonesia’s mobile subscribers grew from 2000 to 2013 and had reached 121% of the 250 million population, far above the Indonesian financial inclusion. The mobile service growth is potential to be synergized with the expansion of financial inclusion access solution-based cellular technology through mobile payment services. On the other hand, there are opportunities and challenges of the Indonesia’s financial services market structure that are likely to be monopolistic with interest-competition-based and has not fully prioritized the sources of revenue from service charge (Sutardjo, 2013). Indosat has launched its electronic money services, namely Dompetku since November 21, 2008; however, Dompetku had just only recorded one million users, or about 2% of 54,2 million total subscribers until 2014, thus having the least active subscribers among other operators. Meanwhile, the result of global research conducted by Ernst & Young (EY, 2014) showed that to date innovations in mobile payment worldwide had been conducted only to meet the specific local needs. Since 2000, with the introduction of Smart in Philippines, mobile payment service has obtained attention in a number of emerging markets, such as Kenya and Pakistan. The low achievement of e-money transactions and slow growth of Indosat Dompetku users compared with the other mobile payment providers and mobile subscribers’ penetration ratio become an important issue to be studied. For the last seven-year period, there have been four main issues in mobile payment business that need to be studied systematically and deeply because of their implications on the strategy fit, business sustainability, and responses to market changes. Therefore, this
53
research was conducted to answer the following issues: 1. The potential of e-money transactions from mobile business is very large; moreover, the government has launched a similar program such as Less Cash Society since 2007, but why its usage is still low up to now? 2. What are the causes of the low market penetration of Indosat Dompetku in Indonesia compared to other operators? 3. How is the fit of internal capabilities and business model of Indosat Dompetku with Less Cash Society to be an environment turbulence change? 4. How is the development of an optimal business model for Indosat Dompetku? In order to answer these problems, the objectives of this study were 1) identifying the position of PT. Indosat as part of the industry in providing a response to Indonesian mobile payment market, and identifying how big is the difference between the position of PT. Indosat to market when there is one. This objective will answer the first and second subject matter; 2) analyzing Indosat’s internal capabilities and business model fit with the environment turbulence, 3) formulating the optimum mobile payment business model development design for Indosat. The scope of this study was an assessment of business model strategy which was conducted by Dompetku as one of PT. Indosat business units; therefore, the factors occurring outside PT. Indosat were regarded as environmental factors. This study was expected to be a systematic approach for PT. Indosat in managing its strategic change and exploration of mobile payment business environment in Indonesia. In addition, this study also aimed to identify PT. Indosat’s posture and position as one part of the mobile payment industry in providing a response to the Indonesian market. In the end, it can provide strategic direction produced as recommendations to the unit of Dompetku PT. Indosat, including: a breakthrough in establishing new customer segments; new entrepreneurial opportunities; diversification of new products new markets; mobile payment business paradigm shifting with a long-term value proposition; as well as the establishment of collaboration with all providers regarding the goals aligned with the National vision. The definition of mobile payment in this study is the payment held by mobile telecommunications company as a microfinance system convergence with mobile communications
_______________________ WORLD TECHNOLOGIES _______________________
54
systems, with a cash deposit solution to the publisher through an agent outside the bank. Mobile payment business has been well developed in many developing countries in the world and encouraged policy makers and regulators in each developing country to formulate rules in the era of electronic money by adapting the banking regulations with mobile banking (Klein and Mayer, 2011). In general, the study of mobile payment business model was conducted to see the internal portrait of a company or industry in facing the competition (Narayan, 2013; Johansson et al. 2012). In Achsani et al. (2006), consumer acceptance of mobile payment showed significant directions on perceptions and preferences of consumers to use it.
METHODS Data used in this study included primary and secondary data where the primary data were obtained from in-depth interviews and the secondary data were obtained from the study of relevant literature sources. The collection of data and information was done by in-depth interviews and questionnaires, as well as literature studies. This case study was conducted with a qualitative approach, combined with a quantitative approach in quantification of experts’ assessment interpretation. The respondents were selected by purposive judgment sampling, with a consideration that each respondent has expertise and perspectives to represent every part of the whole mobile payment business value chain. Interviews were conducted to all stakeholders including the Indosat’s internal management of product development area, Indosat’s Internal Mobile Financial Services Experts, Indosat Internal Management of Regulatory Planning and Analysis, academic experts of Information, Computer and Telecommunication (ICT), policy makers of Indonesian telecommunications, Indonesian financial system and payment, and Indonesian consumer protection, Cooperative as one of the primary distribution channels, as well as individuals of the communities. The method chosen was determined to answer the research questions that would evaluate the problems with the procedures to capture and assess the questions. It is presented in two steps: 1. Business model canvas (BMC) was used to answer
ENTREPRENEURSHIP MANAGEMENT
the first issue that is the analysis of the strategy of service business model of Indosat Dompetku as mobile payment service. Furthermore, this business model canvas is helpful in identifying the attributes of strategic aggressiveness (SA) and Capabilities Responsiveness (CR). Among the concept of the existing business model, the BMC was chosen as the simplest model used in designing, evaluating and managing a more modern business model. The preparation of BMC approach starts from customer segment, value proposition, channel, customer relationship, revenue streams, key resources, key activities, and key partnerships, to cost structure (Osterwalder and Pigneur, 2010). 2. Ansoff’s strategic diagnosis approach was used to map and examine the strategies and internal capabilities of Indosat mobile payment business environment. The basic conception of Ansoff’s strategic diagnosis is the profitability of a company that can be optimized when strategic behavior is in line with the environment in accordance with Ansoff’s empirical research (see Kipley, Lewis, 2012; Gianos, 2013; and Ansoff and Sullivan, 1993). This step was used to answer the second issue i.e. the fit analysis of internal capabilities and strategy of Indosat Dompetku business model with the environment turbulence. In addition, it was also used to answer the third issue i.e. developing the optimal business model design of mobile payment services for Indosat Dompetku. Strategic diagnosis is one of tools to ensure the competitive position of the business that can help companies ensure the gap in capabilities. According to Ansoff (1993), strategic diagnosis is a systematic approach to determine the changes that should be made on the strategies and capabilities internally in order to ensure the company can successfully cope with the environment in the future. Ansoff model theory can help companies to improve their business performance through the analysis of the level of turbulence relative to the aggressive industrial environment strategy in response to the capability of the company or the Strategic Success Paradigm (SSP) which states that; 1) the aggressiveness of the strategic behavior of companies must comply with the environment turbulence, 2) the capability responsiveness of company must comply with the strategic aggressiveness, and 3) the company's capability components must support each other. Ansoff SSP formulation is based on three key variables, namely, the environment turbulence,
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS...
strategic aggressiveness, and responsiveness of management capability. In summary, the concept model of Ansoff can be seen in Table 1. The situation and level of the expected future environmental changes refer to the Report of Ernst & Young Research (EY, 2014) entitled "Mobile Moneythe next wave of growth" with the relevance of the issues and research methodologies appropriate to mobile payment context in developing countries, with a predictive occurrence in 2017. Hypotheses of this study stated that there were a gap between market and industry environment in readiness to accept the presence of mobile payment systems, a gap between internal capabilities and strategy of Indosat Dompetku business model with market demand, and gaps in technological developments, core competencies and regulations in Indonesia as the environment turbulence. Figure 1 depicts the research framework that was built from the government's driver of a less cash society. The environmental change phenomenon was analyzed as the environment turbulence for Indosat. Indosat's mobile payment business was then captured using BMC, and the elements were decomposed into two parts,
55
namely, strategic aggressiveness and responsiveness of management capabilities. Capturing business model as a first step to identify company’s strengths and weaknesses is needed in business optimization study. Then by using strategic diagnosis, the two elements groups were analyzed to find out the gap with the environment turbulence.
RESULTS The definition of non-cash payments or e-money referred to the definition issued by Bank for International Settlements (BIS, 1996) is the stored-value or prepaid product in which an amount of value of money stored in an electronic media owned by individuals. In general, e-money has characteristics as follows; (a) the value of money has been recorded in the e-money instrument, or often referred to as stored value, (b) fund recorded in the e-money is entirely within the control of the owner, (c) at the time of e-money card transaction, a transfer of fund in the form of electronic value from the e-money card of consumer to the merchant terminal can be done off-line (Darmawan et al. 2006).
Table 1. Matrix of Ansoff’s environment turbulence TURBULENCE LEVEL
1
2
3
4
5
Environmental Turbulence (includes: available resources, market demand, competitors, regulatory frameworks, sociopolitical climate)
REPETITIVE
EXPANDING
CHANGING
DISCONTINUOUS
SURPRISEFUL
Planned
Unplanned
Obsolescence
Obsolescence
Levels of capability:
CUSTODIAL
TYPE OF RESPONSE
System Shock (e.g. financial crisis) Natural Disaster Disruptive Innovation/ Unforseen New Player (e.g. competitor announces unforeseen & gamechanging breakthrough)
PRODUCTION
MARKETING
REACTIVE
STRATEGIC
FLEXIBLE
PROACTIVE
Strategic Aggressiveness
STABLE
REACTIVE
ANTICIPATORY
ENTREPRENEURIAL
CREATIVE
Management Responsiveness
STABILITY SEEKING
EFFICIENCY DRIVEN
MARKET DRIVEN
ENVIRONMENT DRIVEN
ENVIRONMEN T CREATING
Market/Product Position
MARKET PENETRATION (Existing products w/ Existing Markets)
PRODUCT DEVELOPMENT (New Products w/ Existing Markets)
MARKET DEVELOPMENT (Existing Products w/New Markets)
DIVERSIFICATION (New Products w/ New Markets)
UNKNOWN Hybrid Strategy
Source: Gianos, 2013.
_______________________ WORLD TECHNOLOGIES _______________________
56
ENTREPRENEURSHIP MANAGEMENT
Internal input: mobile payment business model of Indosat Dompetku
External input: less cash society program
Environtmental turbulence assesment
Management capabilities assesment
Strategy aggresiveness assesment
Ansoff’s Strategic Diagnosis The gaps between management capabilities and strategy aggresiveness with environtmental turbulence Management implications: strategy business model inprovement
Figure 1. Conceptual research framework Indosat Dompetku Business Model The processes and concepts of Indosat Dompetku were composed by using business model canvas. BMC, as the initial step in this research, is the identification of customer segments derived from two market segments, namely, the mass market and niche market, which are based on the ownership of bank accounts, mobile phones and smartphones, employment, and household consumption. Dompetku is targeted to customers from the urban formal and informal sectors with low income or below the minimum wage, to people who have income from natural resource processing products that do not use formal banking services, to social communities, and to corporations as a potential niche market. The value proposition that was given becomes a combined easy, fast and safe value. The channels that are used to provide the value proposition of Indosat Dompetku are through multiple channels such as mobile network infrastructure and applications that can be installed in the customer's mobile phone, point of sales named Gallery Indosat, direct sales force, as well as modern channels that already have a partnership. Intensive customer relationships were built through three relationships, i.e. automated service, self-service system, and unbundling cellular business. Today, Indosat Dompetku is not the core business, yet it was
built to be a source of new revenue streams by providing value to each customer segment so that they will have the willingness to pay. There are several ways of how Indosat builds its revenue streams through Dompetku, such as the cost of using the service or transaction fees (contributing to 47%), commission fees (contributing to 26%), and floating funds interest (contributing to 28%). Indosat has at least three key resources in implementing Dompetku, namely, financial guarantee or liquidity to manage customers’ cash-in/cash-out, platform technology and creativity in creating an application of intellectual resources, and human resources with competence in financial services. In addition, some of the activities are key activities such as electronic money license compliance, customer registration procedure (Know Your Customer), liquidity management up to agent level, guarantee for the safety of floating funds, distribution and communication channel management to reach customers, as well as creativity and innovation in microfinance management features. Indosat performs its key activities through three channels i.e. investment in internal and startup developers, establishment of a special unit of digital partnership, and venture. Indosat has no plan to become a telco-lead mobile payment provider in the near future since it still focuses on its core business. In other situations, the ecosystem of
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS...
electronic money is not currently well-established; therefore, partnership is the basis and precondition for Indosat to run its present mobile payment business, and it has teamed up with various parties in key partnerships, and its partners include mobile payment providers, banks, agencies, traders, public service corporations, micro-insurances, and the government. In the end, Dompetku mobile payment service relies heavily on its main mobile telecommunication network infrastructure. Therefore, it is necessary to understand the cost structure of mobile telecommunication services in general, where the largest component of cost structure is the cost of telecommunication services itself. Figure 3 on the next page will describe the business model canvas comprehensively on the current situation and after being optimized by Ansoff’s strategic diagnosis approach. Ansoff’s Strategic Diagnosis of Indosat Dompetku According Sutadi (2012), some of the challenges faced by mobile payment system at present include access to technology, investment, business models, security, and more particularly regulations. Therefore, this study used four factors as the environmental indicators, namely, culture, technology, ecosystem, and regulation. These four factors were then measured by using turbulence level of Ansoff’s strategic diagnosis approach. 1. Environment turbulence level The first step in strategic diagnosis was used to identify and evaluate the environment turbulence of mobile payment business. Turbulence measurements of environmental changes were made by combining two aspects, i.e. (1) Changeability that is measured from the complexity of the corporate environment and novelty that has relatively become a challenge for the company, and (2) Predictability that is measured from the speed of the process of change or the ratio between speed of environmental change with that of company response, and measurement of the visibility of future or information adequacy on the future environment. The current changes of the Indonesian society culture in addressing the mobile payment have not yet reached the level of turbulence because the complexity still influenced by the national economy where future information is still predictable and the absence of a national event that can cause a discontinuous information. The speed of social
57
change is still comparable to the company's response. In the technology aspect, a variety of technological innovations quickly spread globally and gave impact to all sectors of life. The telecommunication industry itself has created a new driver where most of technologies have leapt beyond the usability experience. However, on the market side, the speed of public response to telecommunication technology’s innovation has not been evenly distributed. However, the middle-upper class society and city dwellers are able to respond the changes in technology well and comparably, while the lower-middle class society has the opposite situation, especially for the people living in rural areas. The ecosystem phenomenon showed that mobile payment has a complexity affected by the national and regional economy; nevertheless, the progress so far is still ordinary and normal. The speed of ecosystem’s development is still comparable and can be followed. Similarly, the complexity influencing the regulatory changes is still dominated by the national economic conditions, especially businesses directly related to microfinance stability and any type of risks for the national interest. Table 2 describes the strategic diagnosis complete results of current environmental changes and their comparison with the results of the mobile payment future environmental study. In the future mobile payment environment, all aspects of the environment will be strongly influenced by global complexity that has passed through various novelty with normal discontinuities. The speed of system evolution and mobile payment market is driven and accelerated by the emergence of new technologies, and customers’ needs have exceeded the speed of the company’s response since future information can only be partially predicted so that in the comparison between the current environment changes and the future changes, turbulence occurs with a gap of 1,75. 2. Strategic aggressiveness Ansoff’s strategic aggressiveness can be explained through two characteristics, namely: (1) the discontinuity degree of products or services in the past, competitive environment, and marketing strategies, and (2) timeline of the presence of new products or services produced by a company is compared relatively to new products or services existing in the market. Of the nine elements
_______________________ WORLD TECHNOLOGIES _______________________
58
ENTREPRENEURSHIP MANAGEMENT
of business model canvas, five elements of Dompetku business model canvas are grouped as indicators of strategic aggressiveness, such as value proposition, customer segments, customer relationships, channels and revenue flows.
competitors and developed a loyalty by offering free premium (freemium) for the complementary products in a bundling and innovative way, such as insurance.
Based on the business model of Indosat Dompetku, the strategic aggressiveness level is currently at the level of "Reactive" with turbulence level of 2,3, as shown in Table 3. The gap that exists between the current strategic aggressiveness and future environment turbulence is 1,83 (gap> 1).
The capacity of Indosat management in running Dompetku is measured based on five Ansoff’s scales with 52 management capacity indicators or attributes which are grouped into six components, namely, manager, corporate culture, organizational structure, systems or business processes, technology, and capacity. The indicator level of Ansoff’s quantification is made up of five types, i.e. custodial, production, marketing, strategic, and flexible.
3. Responsiveness of management capability
Indosat Dompetku by far still offers a common value proposition, and there is no authentic differentiation compared to other providers in spite of the various initiatives and development discourse. Customer segmentation that is conducted so far is still reactive against competitors and follows the common market players, no creativity and breakthroughs that distinguish it from other operators. In customer relationships development, Indosat Dompetku has undergone a number of changes and differentiation from the simple relationship model owned by the
Table 4 shows the assessment results of Indosat’s internal capabilities. Based on the results of closed questions by questionnaire, it indicates that the types of responsiveness of Indosat management capabilities are still at the level of "Marketing" with the average score of CR = 3,82. The existing gap between responsiveness of management capabilities and future environment turbulence is 0,33.
Table 2. Environment Turbulence Level (ETL) assessment result Category Average score of culture change Average score of technology change Average score of ecosystem change Average score of regulation change Environment Turbulence Level (ETL)
Current ETL 2,25 3 1,75 2,5 2,38
Future ETL 4,75 4 3,25 4,5 4,125
Table 3. Strategic Aggressiveness (SA) assessment result Category
SA score
Average score of value proposition level 2 Average score of customer segments level 1,5 Average score of customer relationship level 3 Average score of channels level 2,5 Average score of revenue streams level 2,5 Strategic Aggressiveness Level 2,30 (Reaktif) Strategic Aggressiveness Gap 1,83 Notes: C = Culture, T = Technology, ES = Ecosystem, R = Regulation
C 4,75 4,75 4,75 -
Future ETL T ES 3,3
R 4,5
Gap 2,75 3,25 1,75 2 0,75
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS...
59
Table 4. Strategic Aggressiveness (SA) assessment result Category
CR score
Manager attribute 3,47 Culture attribute 3,82 Structure attribute 3,71 System attribute 4 Technology attribute 3,8 Capacity attribute 4 Responsiveness of management capability level 3,82 (Marketing) Responsiveness of management capability gap 0,33 Notes: C = Culture, T = Technology, ES = Ecosystem, R = Regulation
In figure 2, each gap of three key succeeding factors based Ansoff’s strategic diagnosis, can be seen. The gap between current environmental change level and turbulence of the expected future environmental change is still considerable far i.e. 1,75 (gap> 1) with present ETL of 2,38 and Future ETL of 4,13. According to Ansoff’s diagnosis, the present mobile payment business environment is still at the level of “expansion”, whereas in the future, it has to be full of surprises (surprising). The level of strategic aggressiveness of Indosat Dompetku is still at the level of “Reactive” with future environmental turbulence level of 1,83. The assessment results of strategic responsiveness indicates that Indosat’s strategic aggressiveness attributes have a reasonably big gap with the expected future environmental changes, including: a. The society cultural factor in the future environment which is compared with the customer segments will produce the biggest gap (3,25). b. The society cultural factor in the future environment which is compared with the value proposition will produce a gap of 2,75. c. The Regulatory factor in the future environment which is compared with channels closely associated with the regulation will produce a gap of 2. d. The ecosystem factor in the future environment which is compared with revenue flow closely related to ecosystem will have a gap of 0,75. e. The society cultural factor in the future environment is compared with customer relationship that becomes part of the formation of the society, and this factor has a gap of 1,75.
C 4,8
-
Future ETL T ES 3,3 4 -
R -
Gap 1,08
0,75 0,1
The responsiveness of management capability is still at the level of “Marketing”, as indicated by the gap which is still fairly close (0,33). In general, responsiveness of Indosat management capability has been able to respond well to the expected future environmental changes, and the factors include: a. Manager, culture and structure factors produce a drive for the society cultural change coming from the internal corporate culture to external corporate culture, or they can become agents of change. These factors have gap of 1,08. b. Indosat management system factor as part of the mobile payment ecosystem in Indonesia has exceeded the level of turbulence in the expected future ecosystem, with gap of 0,75. c. Technology and capacity factors are the most important management capabilities that prepare Indosat in responding to the speed of technological changes in the expected future. A gap of 0,1 indicates that Indosat technology is in accordance with the needs of the expected future mobile payment technology. The development of management capability is also needed in key partnerships and key activities; therefore the developmental design of the business model of Dompetku will be like the canvas described in figure 3. Managerial Implications This study provides recommendations of managerial implications in a draft of strategy and business model development work program which include activities, objectives, implementation, and parties involved in each program generated as described follows:
_______________________ WORLD TECHNOLOGIES _______________________
60
ENTREPRENEURSHIP MANAGEMENT
1. Reviewing a new customer segment as wide as possible, including the central and local government levels and establishing mutual cooperation with the banking community to minimize the culture gap with customer segments. 2. Establishing campaign programs for consumers to disseminate information that mobile payment is a new solution that works effectively and is safe for adoption. Besides offering a solution for financial transactions more securely, efficiently and conveniently, it also is widely available with interoperability among all providers. The program is to overcome the culture gap with a value proposition.
1 | Environment turbulence level
3. Conducting intensification the standard operation procedure (SOP) and training held for the agency channels in an international standard and open for all channels, and establishing cooperation with legal entities and being close to consumers such as PT. Pos Indonesia, PT. Pegadaian, cooperatives, rural banks, BPD, and BMT. This is to provide assurance for the regulators in the adoption of legislation to address the regulatory gap with the channel. 4. Creating new entrepreneurial revenue streams, with the commercialization of excess capacity of technology platforms as well as accelerating the development of mobile payment ecosystem in Indonesia. This step is to answer the revenue streams’ gap with the current ecosystem. Present ETL 2,38 2 3
Present ETL 4,13 4 5
Gap = 1,75 2,30
| Strategic aggresiveness level
| General management capability level
Gap = 1,83 Gap = 0,33 3,82
Figure 2. The strategic diagnosis diagram of Indosat Dompetku
Figure 3. Business model canvas design of Indosat Dompetku
_______________________ WORLD TECHNOLOGIES _______________________
FIT ANALYSIS OF INDOSAT DOMPETKU BUSINESS MODEL USING A STRATEGIC DIAGNOSIS...
The implementation period is determined using the basic priority of strategy and alignment of business objectives with corporate objectives so that it becomes effective in the allocation of corporate resources.
CONCLUSIONS AND RECOMMENDATIONS Conclusions This study has a positive impact in opening up a space to constructively question the fit of an established strategy and to strategically study the environment of a business model, which is synthesized from the interpretations and strategy diagnosis. The nine elements of the canvas business model of Dompetku that have been identified and defined are assessed to see their fit with the expected future environment turbulence. This study can be essentially summarized as follows: 1) the diagnosis shows that the Indonesian market environment is not ready yet to accept the changes or the presence of products and technology services for mobile payment systems as part of the solution to the problem of non-cash payments in the future, especially in culture and regulation factors that regulate the convergence of telecommunications and financial businesses. This is appropriate in answering the fit of the study results with the hypothesis which in accordance with the research results of Narayan (2013), which demonstrates the need for a synergistic collaboration of stakeholders in building a mobile payment ecosystem; 2) low penetration of Indosat Dompetku in Indonesian mobile payment industry is caused by the persistence of the gap between Dompetku’s strategic aggressiveness with the future environment turbulence; 3) the gap also shows that Indosat's strategic business environment is not ready yet to face the future mobile payment, and must change its competitive strategy in order to be aligned with the expected future environment; 4) for the development of optimal Dompetku business model, the seven elements of current business model require developmental strategies including value proposition, customer segments, customer relationships, channels and revenue streams.
61
Recommendations Based on the strategic diagnosis results, the recommendations given to Indosat’s management for its optimal development strategy of Dompetku business model include the requirements to review customer segmentation, to allow opportunities for new customer segment creation, and to strengthen the channels towards intensification of Dompetku agency, focusing on quality not just quantity. In addition, braveness is required to shift the business paradigm by offering a value proposition with longer term, leading to the extensification of the value of mobile payment service; moreover, strategic planning and analysis of regulation with the basis of issue management and market surprise are also necessary to do. For further research, it is recommended to look further on market readiness in accepting the mobile payment turbulence in every level, especially on the perceptions and preferences of consumers in meeting their needs.
REFERENCES Achsani, Anggraeni, Bimantoro, Mulyati, Oktaviani, Pasaribu, Rukmitasari, Sigalingging, Sumedi, Wijayanto. 2006. Persepsi, preferensi dan perilaku masyarakat dan lembaga penyedia jasa terhadap pembayaran non tunai. Jakarta : Bank Indonesia Publication. Ansoff HI, Sullivan SA. 1993. Optimizing profitability in turbulent environment : A formula for strategic success. Long Range Planning 26(5):11–23. http://dx.doi.org/10.1016/00246301(93)90073-O. Ernst and Young. 2014. Mobile money the next wave of growth. Optimizing operator approaches in a fast-changing landscape. EYG no. EF0134. CSG/GSC2014/1276530. Gianos. 2013. A Brief introduction to ansoffian theory and the optimal strategic performance postioning matrix on small business. Journal of Management Research 5(2):107–118. http:// dx.doi.org/10.5296/jmr.v5i2.3129. Hidayat, Besar,Cahyono, Donanto, Firmansyah, Fadly, Hansa, Kusprianto, Pramono, Setiawan, et al. 2006. Upaya meningkatkan penggunaan alat pembayaran non tunai melalui pengembangan e-money. Jakarta : Bank Indonesia.
_______________________ WORLD TECHNOLOGIES _______________________
62
Johansson J et al. 2012. Business Models at work in the mobile service sector. I - Business 4(1): 84–92. http://dx.doi.org/10.4236/ib.2012.41010. Kipley D, O’ Lewis A, Jau-Lian J. 2012. Extending ansoff strategic diagnosis model. SAGE Open1– 14. DOI: 0.1177/2158244011435135. Klein M, Mayer C. 2011. Mobile banking and financial inclusion–The regulatory lessons. Policy Research Working Paper 5664. The World Bank Financial and Private Sector Development Public – Infrastructure Advisory Facility. Narayan S. 2013. Mobile payment. Comparison of mobile wallet concepts [thesis]. Stockholm: KTH-Royal Institute of Technology.
ENTREPRENEURSHIP MANAGEMENT
Osterwalder A, Pigneur Y. 2010. Business Model Generation. New Jersey: John Wiley and Sons. Rappa MA. 2004. The utility business model and the future of computing services. IBM Systems Journal 43(1):32–42. http://dx.doi.org/10.1147/ sj.431.0032. Sutardjo, Daryanto, Arifin, Priyarsono, 2013. Struktur pasar persaingan perbankan Indonesia dalam Periode Konsolidasi. Jurnal Manajemen & Agribisnis 8(2): 115 – 127. Sutadi H. 2012. Rolling out digital payment platforms– An Indonesian perspective. Singapore: 17th Annual Cards and Payment Asia.
_______________________ WORLD TECHNOLOGIES _______________________
7
LEADING SECTOR DEVELOPMENT AND IT'S IMPLICATONS ON THE LENDING PORTFOLIO AND NON-PERFORMING LOAN OF SMALL MEDIUM ENTERPRISES Dewi Margareth Lumbantoruan*)1, Bagus Sartono**), and Setiadi Djohar***) PT. Bank Danamon Indonesia, Tbk Jl. Prof. Dr. Satrio Kav. E IV No. 6, Mega Kuningan, Jakarta 12950 **) Department of Statistics, Faculty of Mathematics and Natural Science, Bogor Agricultural University Jl. Meranti Wing 22 level 4-5, Kampus IPB Darmaga, Bogor 16680 ***) PPM School of Management Jl. Menteng Raya 9, Jakarta 10340 *)
ABSTRACT The research objectives were to analyze the condition of the SMEs lending portfolio and a comprehensive strategy to ensure that the SMEs Line of Business could grow sustainably. There are several analytical methods employed in this study, such as Location Quotient (LQ) and Klassen Typology methods. The consolidated results of both analyses will be developed as a leading sector. The sectors that will be selected based on the result from the Location Quotient analysis include the sectors in the 4th quadrant and the 1st Quadrant. The analysis showed that 12 economic sectors spread throughout 33 provinces are considered to be the leading sectors, where the Transportation, Financial Intermediaries and Fisheries are the sectors that have the highest distribution in the 4th Quadrant while the Fisheries, Wholesale and Retail, as well as the Agriculture are the sectors which also have a high level of distribution in the 1st quadrant. The sectors that will be chosen based on the results from the Klassen Typology analysis include the sectors in the 1st quadrant. The analysis showed that there are 12 economic sectors spread throughout 31 provinces considered to be developed and fast-growing sectors, where the Agriculture, Fisheries, and Construction are the sectors that have the highest distribution. The consolidated results of the both analyses showed that the leading sectors consist of 10 economic sectors, namely, Agriculture, Fisheries, Processing industry, Social services, Construction, Electricity, Gas and Water, the Provider of accommodation and eating and drinking, Mining, Wholesale and Retail, and Transportation spread throughout 27 provinces. Leading sectors are not the same in every province, although there are certain sectors that excel in several provinces, but there is also one dominant sector that exists only in certain provinces. Keywords: location quotient, klassen typology, leading sector, SMEs, portfolio
ABSTRAK Penelitian ini bertujuan melakukan analisis terhadap kondisi portofolio UKM dan merumuskan strategi yang komprehensif agar Lini Bisnis UKM dapat bertumbuh dengan kwalitas kredit yang sehat. Alat analisis yang digunakan dalam penelitian ini, yaitu analisis Location Quotient (LQ) dan analisis Klassen Typologi. Hasil konsolidasi berupa irisan sektor dari kedua analisis akan dikembangkan sebagai sektor unggulan. Sektor yang akan dipilih dari hasil analisis LQ adalah sektor yang berada pada kuadran 4 dan kuadran 1. Terdapat 12 sektor yang tersebar di 33 provinsi, dimana sektor Transportasi, Perantara Keuangan, dan Perikanan merupakan sektor yang penyebarannya tertinggi di Kuadran 4 sementara sektor Perikanan, Perdagangan Besar dan Eceran, serta Pertanian merupakan sektor yang penyebarannya tertinggi di kuadran 1. Sektor yang akan dipilih dari hasil analisis Klassen Typologi adalah sektor yang berada pada kuadran 1. Terdapat 12 sektor yang tersebar di 31 provinsi, dimana sektor Pertanian, Perikanan, dan Konstruksi merupakan sektor yang penyebarannya tertinggi. Hasil konsolidasi analisis LQ dan Klassen Typologi menunjukkan bahwa terdapat 10 sektor unggulan yang tersebar di 27 provinsi yaitu sektor pertanian, perikanan, industri pengolahan, jasa kemasyarakatan, konstruksi, listrik, gas dan air, penyedia akomodasi dan makan minum, pertambangan, perdagangan, dan transportasi. Sektor unggulan tidak sama di setiap provinsi, meskipun ada sektor-sektor tertentu yang unggul di beberapa provinsi namun ada juga sektor yang dominan hanya di provinsi tertentu saja. Kata kunci: location quotient, klassen typologi, sektor unggulan, UKM, portofolio 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
64
INTRODUCTION In the first semester of 2014, Indonesia's financial system stability was maintained although it faced new challenges in the form of a slowdown growth in the domestic economy as a result of the continuation of some of the external and internal problems in the previous semester. External problems were triggered by the uncertainty of global economic growth and a downward trend in commodity prices, especially crude palm oil and global oil which also have implications for the economic slowdown in many emerging market countries, including Indonesia. Other issues related to the internal current account deficit and some risks, e.g. the potential financial imbalances, the potential occurrence of the downturn in the financial cycle could trigger a further slowdown in domestic economy. Economic conditions have an impact on the Indonesian banking performance in which the total bank credit experienced slow growth from 21,73% (year on year in 2013 versus 2012) to 17% (year on year Juni'14 versus June 2013). This slowing growth was also experienced by the loans of SMEs. In the first semester of 2014, the market share of SMEs loans toward the total bank credit declined like last year of the same period from 15,96% to 14,97%. Outstanding of SMEs in the first semester of 2014 amounted to Rp. 520,473 billion where its growth experienced a slowdown from 14,15% (year on year in 2013 versus 2012) to 9.6% (year on year in June versus 2014 in June 2013). While credit risk is likely to increase as reflected in the increase in the ratio of Non-Performing Loan (NPL), SMEs loans increased from 3.39% in December 2013 to 4.05% in December 2014. There are allegations that the above pattern is not natural, yet it will be specific to a particular industrial sector that needs to be studied more regarding the specific nature of the sector. Development of SMEs becomes a crucial thing since SMEs have such an important role for the economic growth of a country, including in the State of Indonesia (Husband and Purnendu, 1999; Tambunan, 2005). The development of leading sectors can help banks to know the industry sector which has a huge market potential in certain provinces along with the level of risk. This research needs to be conducted to address these following issues: (1) How is the condition of SMEs lending portfolio at this time? (2) How is it to determine the economic sector of great potential in the province
ENTREPRENEURSHIP MANAGEMENT
with a level of risk that is still well managed? (3) How is it to determine the potential sectors based on economic growth and PDRB in each province? (4) How is it to determine the development of leading sector? Adhitama R (2012) examined the development of economic sectors in each District in Magelang. Location Quotient analysis results showed that agriculture, finance, leasing and business services as well as the services sector are the dominant sectors in the district of Magelang. Shift Share analysis results showed that the sectors of construction, transport, and communication, mining, trade and agriculture have the highest competitive advantage compared to other sectors. Klasse Typology analysis results showed that the agricultural and service sectors dominate the leading sectors in each district in Magelang. The results showed that the sectors of agriculture, service, and trade are the leading sectors in Magelang District. There are 9 districts which have a dominant sector in the service sector, 8 districts which have advantages in the agricultural sector, and 7 districts which have advantages in the trade sector. Kadek Ayu Novita Prahasta Dewi and Eko Budi Santoso (2014) examined the development of leading commodities in the sector of agriculture in Karangasem through sustainability approach. Location Quotient analysis results indicate that the leading sector in Karangasem regency is the agricultural sector with the food crops as its sub-sector. Types of leading commodities in the field of crop farming sector that have the potential to be developed further include the rice commodities in the Districts of Manggis, Bebandem and Selat; cassava in Kubu SubDistrict,and soybeans in Manggis Sub-district. Rahmana, Iriani, and Oktarina (2012) examined the development strategy for SMEs manufacturing sector. The results of count value of LQ in the form of an index value show an outstanding sector from the SME sectors i.e. the manufacturing sector with the value of index of LQ amounting to 4.277. Index value of SMEs LQ in the sector of manufacturing is the largest of all indices of other sectors. Ratnasari ED (2014) examined the Sector Forming Analysis of PDRB and Determination of Outstanding sector in Kebumen Regency. Location Quotient analysis results show the basic sectors in Kebumen include the 4 sectors Agriculture, Mining and Quarrying, Finance,
_______________________ WORLD TECHNOLOGIES _______________________
LEADING SECTOR DEVELOPMENT AND IT'S IMPLICATONS ON THE LENDING PORTFOLIO...
Leasing and Business Services, as well as the services of the outstanding sectors. Analysis results indicate the sectors of Mining and Quarrying and services are the sectors that develop and grow faster. Overlay analysis results show 5 sectors, i.e. Mining and Quarrying, Agriculture, Industry of Processing, Finance, and Services. The leading sectors that can drive the economy of Kebumen Regency and will be developed are Mining and Quarrying and Service sectors. Tabrani A (2008) examined the analysis of leading sector in Mandailing Natal Regency, North Sumatra Province. Location Quotient analysis results indicate that the agricultural sector and mining and quarrying sector are the dominant sectors which are indicated by very high numbers of LQ. This suggests that the ability of these two sectors in generating revenue streams into the economy is great. This research was conducted in the framework of a comprehensive analytical study by considering various factors which are very influential. However, this study has limitations on the followings: a. The object of this research is a portfolio of SMEs lending b. Discussion of the elements that will be analyzed for the development of leading sectors are based on the secondary data of Bank Indonesia (BI) and the Central Bureau of Statistics (BPS) and equipped with secondary data of literature.
METHODS The research was conducted by using secondary data which is in the form of data analysis and literature studies from the data of debit balance and SMEs non-performing loans per sector in each province, as well as PDRB data from the provincial and national governments. The Sources of Data were taken from Bank Indonesia (BI) and the Central Bureau of Statistics (BPS). This research was using analysis of quantitative by using two methods i.e. analysis of growth patterns of economic sectors of Klassen Typology and analysis of Location Quotient. The data which were used for the analysis of Klassen Typology would ideally come from the SMEs data; however, due to the circumstances in which they were not provided, this research used National PDRB data as the approach.
65
There are twelve (12) SMEs economic sectors to be developed, i.e.: (a) agriculture, hunting, and forestry, (b) mining and quarrying, (c) processing industry, (d) electricity, gas and water, (e) construction, (f) the provider of accommodation and eating and drinking, (g) transport, storage and communications, (h) financial intermediaries, (i) social services, socio-cultural, entertainment, and other persons, (j) fisheries, (k ) wholesale and retail trade, (l) real estate, leasing, and business services. Calculation and analysis of the Location Quotient (LQ) was based on the comparing data from Outstanding Balance and NPL in every sector of the economy of the 33 provinces nationwide to determine the sectors with great economic potentials in the province with a level of risk still well managed. Outstanding Balance and NPL used on the base of calculation were the data of Outstanding Balance and SMEs NPL of each sector of the economy in each province from 2010–2014. Isserman (1977) and Hood (1998) suggested that the method of Location Quotient (LQ) is used to identify the main commodities in the province. LQ technique is one approach which is commonly used in the economic model base as the first step to understand the activity sector of growth driver. This technique presents a relative comparison between the ability of sectors in an area that was investigated with the same capabilities on a wider area. The assumptions used in the analysis of LQ were: 1) relatively uniform geographical conditions, 2) uniform activity patterns, 3) uniform products produced by each activity. Calculation and analysis of Klassen Typology were conducted by comparing the PDRB data of every sector of the economy of the 33 provinces nationwide to determine the potential sectors based on their PDRB contribution and growth rate in each province. The value of PDRB on which to base the calculation was the value of PDRB at constant prices of year 2009 to 2013. The consolidated results of the analysis of these two approaches will be developed into an outstanding strategy that becomes the strategy for SME banking business lines in Indonesia in enhancing the lending portfolio and lowering the NPL. The pattern of economic growth in the region can be determined by the analysis of Klassen Typology sector approach by systematically combining the PDRB growth rate and PDRB contribution by sector, and they
_______________________ WORLD TECHNOLOGIES _______________________
66
ENTREPRENEURSHIP MANAGEMENT
are then classified into groups/characteristics based on Klassen Typology (Table 1). By using Klassen Typology analysis, it will show the four classifications of growth economic sectors, i.e. the developed and fast growing sectors, developed but pressured sectors, potential sectors or sector that can still thrive (grow), and relatively underdeveloped sectors (Sjafrizal, 2008). Stages of the process of data analysis with the approach of Klassen Typology and Location Quotient (LQ) can be seen in Table 2. The research framework (Figure 1) was constructed from a portfolio of lending conditions of Small and Medium Enterprises (SME) in Indonesia, which slowed the growth of lending portfolio in the first semester of 2014, and they also experienced worsening credit quality by the increase of the collectability by ≥ 3 (NonPerforming Loan). This research aimed to develop the leading sectors of SMEs by integrating the two approaches, i.e. Location Quotient (LQ) and Klassen Typology. Location Quotient approach is a method used to analyze the economic sectors with the potential market size in each province along with the quality of credit. At the macro level, Klassen Typology approach in this study was started by analyzing the pattern of economic growth in the region by systematically combining the growth rate of PDRB and PDRB contribution by sectors; therefore, sector which have potentials to be developed can be identified.
RESULTS Conditions of SMEs Loan Portfolio In 2013, SMEs banking recorded a significant growth. SMEs lending increased by 14% i.e. Rp. 489,934 billion
compared to that in the year of 2012 with a reasonably high risk with the NPL ratio of 3.4%. Nevertheless, in the first semester of 2014, the movement of outstanding loans decreased compared to that in 2013. In June 2014 outstanding reached Rp. 520,473 billion and decreased growth from 14.15% (year on year in 2013 versus 2012) to 9,6% (year on year in June versus 214 in June 2013). Even in the second semester of 2014, it decreased even more, reaching 8,47% in December 2014. In terms of quality, the credit experienced the worst condition of Collectability 3–5 (NPL). SMEs NPL increased from 3,39% in December 2013 to 4.05% in December 2014. The decline in growth occurred in all economic sectors except for the electricity sector, and gas and water that increase their growth from 1,62% (year on year January 2014 versus January 2013) to 24,21% (year on year in December 2014 versus December 2013) while the NPL became worse in nearly all sectors except for fisheries sector (declining from 5.97% in January 2014 to 4,36% in December 2014) and electricity, gas and water (declining from 1,42% in January 2014 to 1,13% in December 2014) Data distribution of Debit Balance LQ of 10 SMEs sector shows the value of LQ Debit Balance was > 1 less than the value of LQ of Debit Balance which was <1 because it was more dominated by small values, including agricultural sector, fisheries, mining and quarrying, manufacturing, electricity, gas and water, accommodation, eating and drinking providers, transportation, financial intermediaries, social services, and real estates. Meanwhile, the data distribution of 2 (two) other SMEs sectors i.e. the trade sector showing the value of LQ of Debit Balance of > 1 is greater than the value of LQ Debit Balance of <1, and the construction sector has a normal distribution with a uniform distribution in each province.
Table 1. Klassen Typology Indicator Contribution of PDRB (s)
Growth Rate (g) Description:
Quadrant Type II Developed but Pressured Sector si > s (+), gi < g (-) Type III Relatively underdeveloped sector si < s (-), gi < g (-)
Type I Developed and Fast Growing Sector si > s (+), gi > g (+) Type IV Fast growing sector (Potential) si < s (-), gi > g (+)
gi (PDRB growth rate of the region i), si (Contributions of PDRB sectoral area i), g (PDRB growth rate of national sectoral), s (Contributions of PDRB national sectoral)
_______________________ WORLD TECHNOLOGIES _______________________
-
-
Analysis of Potential of Sectoral Development (Klassen Typologi)
Analysis of Leading Sector Development and Managerial Implications
Analysis results of Location Quotient and Klassen Typologi
Data of rate of growth and the contribution of provincial PDRB
National and Provincial PDRB Data
SME NPL Data per sector industry in each province
Outstanding SME Data per sector industry in each province
-
Analysis of Market and Risk (Location Quotient)
Secondary Data
Type of Data
Outstanding Data, SMEs NPL per region and industrial sector
Primary Data
Analysis of the SMEs Loan Portfolio (Growth Portfolio and Portfolio of Quality)
Analysis Stage
Table 2. Process of data analysis stage
Research
Central Bureau Of Statistics (BPS)
Determining the leading sector that has great potential with a level of risk that can be managed well in each province
3) LQ BD<1, LQ NPL <1 with unfavorable market size and level of risk can be managed properly
Interpretation of the LQ value to determine which sector has great potential (outstanding sector) with a level of risk that can be managed well in the respective province
Enter into consolidation the results of the analysis of two models that seek slice of sectors in quadrant 1 and 4 (Location Quotient) and Quadrant 1 (Klassen Typologi)
Determine the position of each sector in quadrant I, II, III, or IV
Compare the average of PDRB growth rate and the contribution of each sector in every province and national
Of the average found then sought for the sectors that have the highest value of either of the parameters rate of growth of PDRB and the contribution of each sector
PDRB growth rate of each sector and the contribution of each sector to the PDRB of the province in the year of 2009-2013 is calculated and sought for its average value
Analysis of the PDRB economic sector of the provincial economy in the year of 2009-2013
2) LQ BD<1, LQ NPL >1 with unfavorable market size and a high level of risk
Calculating average value of LQ
Leading sector based on two approaches and Managerial Implications
4 classification mapping of sector growth : 1) Developed and Fast Growing Sector 2) Developed but depressed Sector 3) Relatively underdeveloped Sector 4) Rapidly growing Sector (Potential)
4) LQ BD>1, LQ NPL <1 with good market size and level of risk can be managed properly
1) LQ BD>1, LQ NPL >1 with good market size and a high level of risk
Calculating the value of LQ BD and LQ NPL by entering the notation obtained in LQ formula
The analysis conducted on outstanding and NPL of the industrial sector in each province in 2010-2014
Analysis of NPL trend Bank Indonesia
Information obtained or Results Expected Conditions of the loan portfolio growth decreased from 14.15% in December 2013 to 9.6% in June 2014, and at the end of the second semester 2014 the growth kept on declining and reached to 8.47%. Credit quality worsening , NPLs increased to 4.05% in December 2014
Data Processing
SMEs Portfolio Analysis of the SMEs Growth Portfolio Report Bank Indonesia December 2013, 2014
Data Source
LEADING SECTOR DEVELOPMENT AND IT'S IMPLICATONS ON THE LENDING PORTFOLIO... 67
_______________________ WORLD TECHNOLOGIES _______________________
68
ENTREPRENEURSHIP MANAGEMENT
Portfolio Condition of SME Lending The Potential of Development Sector (Klassen Typologi)
Market Size and Risk (Location Quotient)
LQ BD > 1, LQ NPL > 1
LQ BD < 1, LQ NPL > 1
LQ BD <1, LQ NPL < 1
LQ BD >1, LQ NPL < 1
Developed and Fast Growing Sector
Developed but Pressured Sector
Relatively Underdeveloped Sector
Rapidly Growing Sector
Development of Leading Sector Managerial Implication
Figure 1. The research framework 10 NPL data distribution of LQ SMEs sector showed that the LQ value of NPL of > 1 is less than that of LQ NPL of <1 because it is more dominated by small values of agriculture, fisheries, mining and quarrying, manufacturing industry, electricity, gas and water, construction, transportation, financial intermediaries, social services and real estate sectors. Meanwhile, the sectors of trade and accommodation providers have distribution of LQ NPL value of > 1 which is greater than the value of LQ NPL <1.
fact that if the electricity rates rise, consumers will be encouraged to save their electricity power. Meanwhile, NPL has increased significantly as a result of a decrease in debit balance from 10.51% in December 2013 (consisting of 21.96% of small and medium-sized businesses of 4.74%) to 15.87% in December 2014 (consisting of small businesses of 24.51% and medium ones of 1,98% medium)
The relationship between market size and NPL is positively correlated (+) i.e. 0.436, which means the increase in the variable x (Debit Balance) will be followed by a rise in the value of variable y (NPL). This condition is in accordance with the concept of high-risk high return where the higher level of risk (NPL), the higher the income earned (debit balance).
The data of Location Quotient (LQ) is grouped into four (4) quadrants with the results described in Table 3. Leading sectors that will be selected are the sectors in quadrant 4 (LQ Debit Balance> 1, LQ NPL <1) and Quadrant 1 (LQ Debit Balance> 1, LQ NPL> 1). The analysis shows that of the 396 economic sectors (12 x 33 provincial economic sectors), 91 sectors of the economy (23%) are located in quadrant 1 and 47 economic sectors (12%) are located in quadrant 4.
There are some deviations from the general pattern above that there is a point where Debit Balance is small, yet also high in NPL, and these sectors include electricity, gas and water in Lampung with Debit Balance LQ of 0,578 and LQ NPL of 6,845. Debit Balance in electricity sector, gas and water experienced a decrease by 56% in the growth (yoy). This decline is in line with the data from PLN Lampung province indicating that the number of customers of PLN and sales volume have decreased from 250 million kWh to 229 million kWh, and this is associated with the
Analysis Results of Location Quotient (Quadrant)
Table 3. The distribution of the number of points in 4 (four) quadrants of location Quotient Quadrants 1 2 3 4 Total
Total 91 56 202 47 396
% 23% 14% 51% 12% 100%
_______________________ WORLD TECHNOLOGIES _______________________
LEADING SECTOR DEVELOPMENT AND IT'S IMPLICATONS ON THE LENDING PORTFOLIO...
69
Analysis Results of Klassen Typology
development.
The analysis results of Klassen Typology will be grouped into 4 (four) quadrants with the results described in Table 4. Leading sectors that will be chosen are the sectors in quadrant 1 (gi > g, si > s). The analysis showed that of the 396 sectors (12 x 33 provincial economic sectors), 58 sectors of the economic sectors (15%) are located in Quadrant 1. Not all provinces have the leading sectors in quadrant 1 and the provinces of DI Yogyakarta and East Nusa Tenggara are included in the category that do not have the leading sectors in quadrant 1.
Based on the research results, there are some suggested steps for the SMEs line of business to improve the loan portfolio and lower the risk of non-performing loan as follows: 1. For the leading sectors in the quadrant of L (4) K, SMEs line of business is able to carry out aggressive acquisitions and addition of human resources marketing adjusted to the target loan volume and number of branches. This strategy can immediately be executed in 2015. 2. For the leading sectors in the quadrant of L (1) K, loan portfolio is carried out by improving management of tighter control in running the selection process and verification of borrowers to assess the collateral and prospect of business, by improving the competence of Sales Person to perform refreshment training specifically related to the Credit Analysis, and the approval process of credit proposal applies one level up approval. This strategy is recommended to be run in 2016. 3. In regards to high levels of risk in the quadrant of L (1) K, the Bank is expected to decrease the existing NPL by the restructuring of the debtors that are cooperative and still have a source of repayment, and by conducting asset sales or auctions for borrowers who are not billable. 4. The current condition of the mining and quarrying sector especially coal is still not good; therefore, the proposed strategy includes funding the mining loan for the old debtors who have good historical payments, and performing loan construction by lengthening the loan term of average loans, thus it will enable the borrowers to repay their installments of the loan. 5. For agriculture and fisheries as a group of specific economic sectors, the proposed strategy is to extend credit to a business group of farmers or farmer cooperatives or through cooperative of fishery, to perform acquisitions on freshwater marine fisheries, to set up the schedule for the obligation payment in advance adapted to the harvesting period or adjusted the weather or season factor based on the existing pattern, cooperation with Perum Jamkrindo for agricultural insurance to mitigate the risk of NPL in the event of crop failure or in the event of bad weather leading to the declining productivity of fishing, to improve human resource competencies by recruiting the agricultural graduates for the position of sales person and credit analyst.
Table 4. The distribution of the number of points in 4 (four) quadrants of Klassen typology Quadrants 1 2 3 4 Total
Consolidated Sector)
Total 58 60 116 162 396
Results
Analysis
% 15% 15% 29% 41% 100%
(Outstanding
This analysis is used to draw conclusions by combining the two results of the analysis i.e. the slices of the leading sectors in each location quotient approach (quadrants 4 and 1) and Klassen typology (quadrant 1) as described in Table 5. Table 5 shows the presence of two dominant sectors that can be developed, including: • L(4) K : letter L (4) indicates the 4 LQ quadrant and letter K indicates the 1 Klassen typology quadrant • L(1) K : the first letter L (1) indicates the 1 LQ quadrant and letter K indicates the 1 Klassen typology quadrant The consolidated results of the location quotient analysis and Klassen typology indicate that there are 10 leading economic sectors in the 27 provinces. The sectors of Financial Intermediaries and Real Estate, Leasing, and Business Services are not included in the classification of the leading sectors while the provinces of Bali, DI Yogyakarta, Aceh, West Nusa Tenggara, East Nusa Tenggara and Central Sulawesi are classified as provinces that do not have the leading sectors. Slowdown in the growth of the SMEs loan portfolio and an increased risk of NPL in 2014 require a new breakthrough in the form of determination of leading economic sector and a comprehensive strategy in its
_______________________ WORLD TECHNOLOGIES _______________________
Banten Bengkulu DKI Jakarta Gorontalo Papua Barat Jambi Jawa Barat Jawa Tengah Jawa Timur Kalimantan Barat Kalimantan Selatan Kalimantan tengah Kalimantan Timur Kep. Bangka Belitung Kepulauan Riau Lampung Maluku Maluku Utara Papua Riau Sulawesi Barat Sulawesi Selatan Sulawesi Tenggara Sulawesi Utara Sulawesi Barat Sulawesi Selatan Sulawesi Utara
Province
L(4) K
L(1) K L(1) K
L(1) K
L(1) K
L(1) K
L(1) K
L(1) K
L(1) K
Social services, social Processing cultural, ConstrucIndustry entertainment, tion and other individual L(4) K
Electricity, Gas and Water
L(1) K
Provision of accommodatio, meals and drink Financial intermediaries
Table 5. Results of the analysis of location quotient consolidation and Klassen typology
L(4) K
L(1) K
Wholesale and Retail Seller
L(4) K
L(1) K
L(4) K
L(4) K
L(1) K
Fisheries
L(1) K
L(1) K
Mining
L(1) K L(1) K L(1) K
L(1) K L(1) K
L(1) K
L(4) K
L(1) K
L(1) K
L(4) K
Agriculture, hunting and forestry
Real estate, leasing and corporate services
L(4) K
Transportation, warehousing and communication
70 ENTREPRENEURSHIP MANAGEMENT
_______________________ WORLD TECHNOLOGIES _______________________
LEADING SECTOR DEVELOPMENT AND IT'S IMPLICATONS ON THE LENDING PORTFOLIO...
6. Specifically for Agriculture and Fisheries sectors which are still Non-Target Market, the majority of private banks intend to expand their business into the sectors that can be done gradually while considering the branch network, competence of human resources, and risk appetite, and its implementation can be carried out via Credit Test with the following strategy: a. Conducting tests for a certain period of 6 months b. Determining the minimum loan disbursement that must be successfully acquired over the Test period c. Setting a maximum limit for a test period of 5% of the total portfolio d. Tracking and monitoring the disbursement of the loan account during the test period, including the current account, number of accounts in arrears of 30 days, 60 days, 90 days both for the number of NOA (Number of Accounts) and nominal. e. Setting a benchmark for measuring the quality of the portfolio f. Considering the fact that if the quality is higher than the benchmark test, the test will be considered as a failure and the program will be terminated, while if the quality of the disbursement of the loan portfolio during the test period is at a lower level than the benchmark, then the test is considered to be successful and a policy change can be proposed. Theoretical Implications The findings in this study reinforce that the higher level of risk, the higher rate of return. The results of this study reinforce the opinions expressed by Keown AJ, Martin JD, Petty JW, and Scott DF (2005) that define "Risk is the likely variability associated with the expected revenue or income streams". Risk is the possibility of variability of returns generated. Risk and return have a direct and linear relationship. Keown (2005) also states that there is a principle underlying the learning of Financial Management namely "The Risk-Return Trade-Off: We will not take on additional risk unless we expect to be compensated with additional return". Expected rate of return reflects the investment risk level. If a form of investment has a higher risk, then of course this investment will generate higher returns anyway.
71
Managerial Implications Small and Medium Enterprises (SMEs) are the bank’s line of business where the growth of its loan portfolio is very dependent on the market potential and quality of the acquired industrial sector. Therefore, the determination of the strategy by the SMEs line of business is an important step in the achievement of the performance. In order to achieve the required performance targets, the companies certainly need the support of strategic planning and resources. The study provides positive implications for the growth of SMEs line of business and can be taken into consideration in increasing the loan portfolio and lowering non-performing loans. Managerial implications obtained in this study can be described as follows: 1. Banking has a policy in setting the industrial sector into the target market. The existence of the leading sectors helps the banking industry to determine the sector that has a huge market potential in certain provinces along with the level of risk. Banking business line of SMEs in particular can take the strategy of the two existing considerations i.e. the existing policy and leading sectors. Thus, the strategy is more appropriate, and risk of nonperforming loans can be avoided. 2. Agriculture and Fisheries sectors are still non-target markets, especially for private banks; however, the results of research show that they become the leading sectors with the highest distribution across the provinces compared to other sectors.
CONCLUSIONS AND RECOMMENDATION Conclusions Debit balance loan growth and sound credit quality are a decisive indicator for the growth of the loan portfolio on an ongoing basis (sustainable), and this condition applies to any loan segment including SMEs line of business of a bank. SMEs loan portfolio growth slowdown and an increased risk of non-performing loans in 2014 require a new breakthrough in the form of determination of the leading economic sector and a comprehensive strategy in its development. Leading sectors are not the same in every province, although there are certain sectors that are outstanding in several provinces, but there is also one dominant sector found only in certain provinces and not all of the leading sectors according to the Location Quotient
_______________________ WORLD TECHNOLOGIES _______________________
72
(LQ) have a good growth rate from the perspective of Klassen Typology, thus the slices of the analysis of the two (2) approaches must be searched. The results of Location Quotient (LQ) indicate that there 12 economic leading sectors in the 33 provinces, where the sectors of fisheries, Wholesale and Retail, Agriculture, Hunting and Forestry are those with the highest distribution in quadrant 1 while the sectors of transport, Warehousing and communication, Financial Intermediaries and Fisheries are those with the highest distribution in Quadrant 4. Klassen Typology analysis results indicate that the leading sectors growing rapidly (quadrant 1) consist of 12 economic sectors existing in 31 provinces, while the sectors of Agriculture, Hunting and Forestry, Fishing, and Construction are the sectors with the highest distribution. Consolidated results based on the two tools of analysis show that there are 10 outstanding sectors, namely, Agriculture, Fisheries, processing industry, Community Services, Construction, Electricity, Gas, and Water, Eating and Drinking Accommodation Providers, Trade, Mining, and Transportation, with the criteria of rapid growing and leading sectors with a large market size with a high level of risk, and sectors with a large market size to the level of risk which can be managed properly. The 10 leading sectors are scattered in 27 provinces where the Agriculture and Construction sectors are sectors with a large market size at high risk with the highest prevalence rate while the sectors of Fisheries and Agriculture are the sectors which have a large market size and risks that can be managed well and with the highest level of distribution if compared to other sectors.
ENTREPRENEURSHIP MANAGEMENT
REFERENCES Adhitama R. 2012. Pengembangan sektor-sektor ekonomi di tiap kecamatan di Kabupaten Magelang. Economics Development Analysis Journal 1(2):1–9. Dewi NP, Santoso EB. 2014. PPengembangan komoditas unggulan sektor pertanian tanaman pangan di Kabupaten Karangasem melalui pendekatan agribisnis. Jurnal Teknik Pomits 3(2): 2337–3539 Husband S, Purnendu M., 1999. A conseptual model for quality integrated management in small and medium size enterprise. International Journal of Quality and Reliability Management 16(7): 699–713 Isserman AM. 1977. The location quotient approach for estimating regional economic impacts. Journal of the American Institute of Planners 43(1): 33– 41. Keown AJ, Martin JD, Petty JW, Scott DF. 2005. Financial Management: Principles and Application. 10th Edition. New Jersey:PrenticeHall. Rahmana A, Iriani Y, Oktarina R. 2012. Strategi pengembangan usaha kecil menengah sektor industri pengolahan. Jurnal Teknik Industri 13(1): 14–21 Ratnasari ED. 2014. Sector analysis and determination of GDP formal leading sector in distric Kebuman. Jurnal Fokus Bisnis 13(1). Tabrani A. 2008. Analisis sektor unggulan perekonomian Kabupaten Mandailing Natal, Provinsi Sumatera Utara. Jurnal Sains dan Teknologi Indonesia 10(1): 1–6. Tambunan T. 2005. Promoting small and medium enterprise with a clustering approach: a policy experience from Indonesia. Journal of Small Business Management 43(2): 138–154 Sjafrizal. 2008. Ekonomi Regional, Teori dan Aplikasi. Padang: Baduose Media
_______________________ WORLD TECHNOLOGIES _______________________
Comparative Feasibility Analysis of Modern and Traditional System of Broiler Chicken Farm Business
8
Firda Rachma Amalia*)1, Arief Daryanto**), and Hari Rujito***) Study Program of Tourism Business Manajement, Politeknik Negeri Banyuwangi Jalan Raya Jember KM 13, Kabat Banyuwangi **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Study Program of Agribusiness, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 *)
ABSTRACT Feasibility study is a study assessing a project to be undertaken in the future. This research aimed to analyze whether the broiler business by partnership pattern at Prospek Mitra Lestari (PML) was feasible to be continued. This research analyzed two models of cage that is traditional cage (open) with a scale of 10,000 and modern cage (close) with a scale 14.500 and decided whether they were financially feasible or not. In addition, this research aimed to compare between traditional cage and modern cage with estimation for one year (six harvest times) and to analyze which cage had better feasibility in order to provide recommendations or suggestions to the breeders or young breeders. Sensitivity analysis was based on current input and output data from breeder in 2012. The feasibility study of chicken broiler farm cage partnership with traditional and modern cage with the next ten year estimation showed that the modern cage was better than the traditional cage. It can be seen from the values of NPV, IRR, PP, B/C, GPM and ROI. Sensitivity analysis shows that traditional cage is more sensitive to price changes than modern cage. It is shown in the traditional cage with the capacity of 10,000 produces smaller values, indicating that is it is sensitive to cost increase by 2% and to selling price decline of chicken by 1,7%. The recommendations from this study include inputs to farmers in selecting a modern cage since it is more feasible than the traditional cage for long periods of time, while the traditional cage is more viable than the modern cage if the farmer wants a shorter investment time Keywords: Feasibility studies, Broiler, modern and Traditional cage
ABSTRAK Kelayakan merupakan studi menilai proyek yang akan dikerjakan di masa mendatang. Penelitian ini bertujuan untuk menganalisisis apakah usaha ayam broiler dengan pola kemitraan pada Prospek Mitra Lestari (PML) layak untuk diteruskan. Penelitian ini menganalisisis dua model kandang tradisional (open house) dan kandang modern (close house) dengan skala yang berbeda, yaitu 10.000 dan 14.500 layak atau tidak secara finansial, selain itu penelitian ini bertujuan untuk membandingkan antara kandang tradional dan kandang modern dengan estimasi selama sepuluh tahun untuk untuk memberikan rekomendasi atau masukan pemilihan kandang kepada peternak atau peternak pemula. Analisis sensitivitas didasarkan pada data penenerimaan dan pengeluaran terbaru dari peternak pada tahun 2012. Kelayakan usaha ayam peternakan broiler pola kemitraan kandang tradisional dan kandang modern dengan estimasi sepuluh tahun ke depan menunjukkan bahwa kandang modern paling layak dibandingan dengan kandang tradisional. Hal ini dapat dilihat dari nilai NPV, IRR, PP, B/C, GPM dan ROI kandang modern lebih besar dibandingkan kandang tradisional. Analisis sensitivitas menunjukkan bahwa kandang tradisional sangat sensitif terhadap perubahan harga dibandingkan dengan kandang modern, hal ini ditunjukkan pada kandang tradisional kapasitas 10.000 ekor menghasilkan nilai terkecil yaitu peka terhadap kenaikan biaya sebesar 2% dan penurunan harga jual ayam sebesar 1,7%. Rekomendasi dari penelitian ini adala masukan kepada peternak dalam memilih kandang, yaitu kandang modern lebih layak dibandingkan kandang tradisional jika untuk jangka waktu yang lama, sedangkan kandang tradisional lebih layak dibandingkan kandang modern jika peternak menginginkan waktu investasi yang lebih pendek. Kata kunci: studi kelayakan, ayam broiler, kandang modern dan terbuka 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
74
INTRODUCTION In developing its farm, Jember gives priorities to increase its farm production, job opportunity, farmer welfare, agribusiness and optimization in natural resource exploration. Broiler chicken is an opportunity and added value for Jember to increase its income (PAD-local revenue) and social welfare, and the local potency supports this condition as it is known that Jember consists of a farmland area; therefore, it has enough areas to breed chicken. Jember people generally have good enthusiasm to breed chicken as can be seen from the data from Ministry of Farm of East Java that from 2005–2012 showing that broiler chicken production increased from 6.125 to 162.844 chicken in Jember (Ministry of Farm of East Java, 2013). There are two types of broiler chicken farms in Jember i.e. independent and partnership farms, and there are some companies that apply partnership system including Prospek Mitra Lestari (PML), Ciomas, Patriot, SMS and Sawahan. PML had 105 members in its partnership system in 2012, and the chicken population in each farmland is approximately 3,500 DOC.
ENTREPRENEURSHIP MANAGEMENT
According to Sarianti (2008), the business requires feasibility research to anticipate financial risks faced by the breeders. Broiler chicken farms in PML partnership use modern and traditional cage, especially in Jember, and the prospect of this farming is good i.e. it is profitable. According to Daryanto (2012); however, broiler chicken farm is a farm sensitive to input cost and output price. Financial account is necessary to determine this farm which uses modern and traditional cage. Based on this, the problems of the research were how feasible this farm was based on financial analysis and what the result of financial analysis result comparison of the modern and traditional broiler farms was. The research used feasibility analysis of modern and traditional broiler farm approach to solve the problems, and it analyzed the financial feasibility and result of financial analysis result comparison. Partnership system of PML was selected, and four breeding farms i.e. two from traditional system with 10.000 and 14.000 scales and two from modern system with 10.000 and 14.000 scales were studied.
METHODS
PML partnership system had a number of obstacles during its partnership period where the members did not want to increase their capacities, and the majority of them had a minimal scale of business. As many as 60 breeders still use the traditional cage because the modern cage requires higher investment. Broiler chicken farm is an alternative business to run because it only needs short period, small amount of land, and it can be run intensively with efficient capital and technology. (Zuraih et al. 2006). Broiler chicken farm is prospective enough, but it needs high investment, so that a feasibility analysis should be carried out. There are two types of cage, close and open house cages. This research used this analysis to find out whether broiler chicken farm in partnership system with two different types of cage is feasible to run if seen from the financial viewpoint.
This research used primary and secondary data. The primary data included the report of profit, selling data, and operational costs from 2009 to 2012 from modern and traditional farming systems in Jember. The secondary data obtained from the articles, previous research results and broiler production from 2008 to 2012 from the farming statistics of East Java Province, Ministry of Farm of Jember, and from internet.
We can also consider feasibility analysis as a planning because it is an important point to start and extend the farming, whether it is feasible or unfeasible. (Fante et al. 2001). Subkhie (2012) conducted research on feasibility of broiler chicken farming only by using scale differentiation and found that the highest NPV was at the highest scale i.e. with 22.000 chickens.
AFC I 0 k n t
Data Analysis Method a. Net Present Value (NPV) Systematically, we can acquire NPV by using the following formula (Husnan, 2000):
: annual cash flow after tax : initial investment : discount rate : the expected life of the project : period Investment
_______________________ WORLD TECHNOLOGIES _______________________
COMPARATIVE FEASIBILITY ANALYSIS OF MODERN AND TRADITIONAL SYSTEM OF BROILER...
b. Internal Rate of Return (IRR)
n
Investment rate is an interest rate after total net cash flow is multiplied by the discount factor or after the NPV is acquired. IRR is the maximum interest that farming activity can pay (Kurniasih, 2013). The formula is as follows (Brigham dan Houston, 2006):
e. Return on Investment (ROI)
NPV CFt IRR n
: Net present value : Net cash flow : Internal Rate of Return : the expected life of the project
From the above formulation, the value NPV1 is obtained to determine trial and error method. From here, IRR value is between NPV positive and negative that is NPV=0. Therefore, IRR formulation becomes as follows (Brigham and Houston, 2006):
75
: economic life of the project
ROI is a profitability ratio that measures the capacity of a company with all investment it has in total assets that it uses to acquire the return (Bhatoro dan Apsari, 2012). ROI can be acquired by the following formula (Riyanto, 2004):
f. Gross Profit Margin Gross Profit Margin can be acquired by the following formula (Syamsudin, 1996) :
g. Switching Value Analysis IRR : internal rate of return I 1 : internal rate 1 I2 : internal rate 2 NPV1 : net present value result IR1 NPV2 : net present value result IR2 c. Payback Period (PP) Payback period from an investment explain about the period of time where an investment will acquired the whole return. Sooner the return is, the more interesting the investment is (Rachadian et al. 2012). The formula is as follows (Brigham and Houston, 2006). investasi awal PP P P == Aliran kas bersih x 365
d. Benefit Cost Ratio (B/C) Benefit cost ratio formula is as follows (Gray et al. 1992):
Gittinger (1986) states that variation in sensitivity analysis is switching value, and this switching value is to measure the maximum change. By using this value, the basic change in sensitivity analysis is found in analysis in which its changing value has been known empirically. Macro-economic factors of a region generally influence this change (Syafri, 2009). Meat consumption in Indonesia is increasing because of the people’s awareness to health. Jember is the regency with a large number of meat consumers; as a result, it gives some impacts on broiler farms that require high investment. There are two types of broiler farms i.e. independent and partnership. Partnership constitutes a system that has a good prospect. In this study case, there were two types of cage i.e. modern and traditional, and it is possible to know the profit from the financial analysis (in Figure 1).
RESULT Analysis Result of Modern and Traditional Cage Investment
Bt Ct i
: benefit in the year of t : Cost the project in the year of t : interest rate (%)
The feasibility analysis in this research used the criteria of NPV, IRR, B/C, PP, GPM and ROI, and it was based on the projected data of the 10 year period and used
_______________________ WORLD TECHNOLOGIES _______________________
76
ENTREPRENEURSHIP MANAGEMENT
10% discount rate. Investment feasibility is emphasized in NPV method because it is concerned with money value (Sasrawan, 2011). Table 1 shows the result of feasibility analysis of modern and traditional cages. Based on the feasibility analysis result in Table 1, the farming with modern and traditional cages was feasible to develop. NPV of all cages was positive, and the highest NPV was in the modern cage with 14.500 chickens. NPV means that investment at the beginning of the year will have value in the future. IRR of all cages was beyond the discount rate of 10%, and the highest IRR is in modern cage with 14.500 chickens. B/C of all cages was >1 indicating that the farming using modern and traditional cages gives profits during the project period. The highest B/C was in modern cage with 14.500 chickens showing that the cage managed the cost properly. PP value indicates how long the investment will return. PP value of all cages was > economic period so that modern and traditional cages were feasible. The most immediate return of this investment was about 2 years and six months or 15 periods of livestock harvest in modern cage with a scale of 14.500 chickens. GPM indicates that the higher the GPM is, the higher the gross profit is. The GPM analysis result showed that modern and traditional cages for farming are feasible, but the smallest GPM of 4% was in traditional cage with 10.000 chickens. It is because of the high cost so that it is less efficient. The highest GPM value is in modern cage i.e. 12% with a capacity of 14.500 chickens.
ROI is used to analyze how much the profit percentage earned to the investment cost spent. ROI value of all cages was > 1 so that it was feasible to develop. The highest ROI is in modern cage that is 18% with a capacity of 14.500 chickens. Sensitivity Analysis (Switching Value) The research used switching value to analyze the operational cost and price increase. This analysis aimed to measure the sensitivity of an activity if the condition changes. The research used it until the NPV was close to 0 and IRR was 10%, and it assessed the sensitivity based on cost and price data in 2012. Table 2 shows the sensitivity analysis result. The sensitivity analysis result showed that farming system using modern and traditional cages was sensitive to cost and price fluctuation. The research used sensitivity analysis to show that the breeders had to pay their attention to this sensitive part of this farming (Syarif, 2011). A farming that uses traditional cage with a capacity of 10.000 chickens is sensitive to price fluctuation. It is indicated by the percentage which was on the lowest level, indicating that it was sensitive to cost increase by 2%, and price decrease by 1,7%. The modern cage had the highest percentage of sensitivity to cost increase by 12% and price decrease by 14%. In short, traditional cage is more sensitive to price fluctuation than modern cage.
- To meet the need of animal protein - High demand of broiler meat - High Investment Broiler Farm (Partnership system)
Traditional cage
Modern cage
Financial Feasibility Analysis
Unfeasible: Reinvestment; Reallocation, Reevaluation
Feasible: able to continue this farm
Picture 1. Conceptual Frame
_______________________ WORLD TECHNOLOGIES _______________________
77
COMPARATIVE FEASIBILITY ANALYSIS OF MODERN AND TRADITIONAL SYSTEM OF BROILER...
Table 1. Analysis result of feasibility analysis modern and traditional cage Criteria
14,500 Modern NPV Rp1.100.218.647 IRR 46% B/C 13% PP 2 year 6 month GPM 12% ROI 8% Source: edited from PML data 2009–2012
Scale and type of cage 14,500 Traditional 10,000 Modern Rp740.741.904 Rp645.328.729 33% 43% 11% 10% 3 year 7 month 2 year 8 month 11% 11% 5% 6%
10,000 Tradisional Rp77.202.009 17% 3% 4 year 4 month 4% 2%
Table 2. Analysis result of switching value of modern and traditional cage Change 14.500 Modern
Scale and type of cage 14.500 Traditional 10.000 Modern
Operational 7% Cost Increasing Chicken Price 6,3% decreasing Source: edited from PML data 2012
10.000 Traditional
1,8%
12%
2%
5,5%
14%
1,7%
CONCLUSIONS AND RECOMMENDATION Conclusions The result of the feasibility analysis of farming partnership system using modern and traditional cages with capacity of 14.500 shows that this business is viable or feasible to develop. NPV of modern cage is positive i.e. Rp1.100.218.647, while that of the traditional cage is Rp740.741.904. IRR values of modern cage and traditional cage are 46% are 33% respectively, more than the discount rate of 10%, and the B/C analysis results of modern and traditional cage are 13% and 11% respectively. Based on the analysis, the payback periods of modern cage and traditional cage are 2 years and 2 months and 3 years and 7 months respectively, and this indicates that it is less than the estimation period of 10 years. GPM value of the modern cage is 12% and that of the traditional cage is 11%, and ROI analysis in the modern cage with capacity of 14.500 chickens is 8%, and traditional cage is 5%. Modern cage is sensitive to the increase of operational cost by 7%, and to the decrease of chicken selling price by 6,3% whereas the traditional cage is sensitive to the increase of variable cost by 1,8%, and to the decrease of chicken selling price by 5,5%. The feasibility analysis result of farming in partnership system using modern and traditional cage, with capacity of 10.000 chickens, is feasible to develop.
NPV of modern cage is positive with Rp178.911.719, while NPV of traditional cage is Rp101.040.912. IRR of modern cage is 30% and traditional cage is 37% beyond the discount rate of 10%. B/C analysis >1 in modern and traditional cages is 8% and 4% respectively. Payback period analysis of modern cage is 2 years and 8 months. It means that it is less from estimation period of 5 years and from cage economical period of 8 years, while traditional cage is 2 years, less from estimation period and cage economical period of 5 years. GPM value of modern cage is 7% and traditional cage is 5%. ROI analysis in modern cage is 2,2% and traditional cage is 2,3%. Modern cage is sensitive to the increase of operational cost, that is 12%, and to the decrease of chicken selling price, that is 14%. Traditional cage is sensitive to the increase of variable cost that is 2%, and to the decrease of chicken selling price of 1,7%. Feasibility analysis of broiler chicken farm in partnership system, by using modern and traditional cage, with estimation of 10 years in the future, indicates that modern cage is more feasible than traditional cage. We can see it from NPV, IRR, PP, B/C, GPM and ROI of modern cage that is higher than those of traditional cage. Sensitivity analysis indicates that traditional cage is more sensitive to price fluctuation than modern cage. It is found in traditional cage, with capacity of 10.000, that shows the lowest value, which indicates that it is sensitive to the increase of cost of 2% and to the decrease of chicken selling price of 1,7%.
_______________________ WORLD TECHNOLOGIES _______________________
78
Recommendations The selection of the proper cage has a big influence on the production and profit. Capacity influences the result so that breeders should increase their production capacity up to 14.500 chickens. Both modern and traditional cages are profitable, but the breeders must know each system well so that they will not obtain loss in the production process. Traditional cage needs lower investment than modern cage, but for the economical period, modern cage needs longer time than traditional cage. Besides, modern cage is better than traditional cage in the cases of mortal rate of broiler chicken, chicken’s weight and environment. Broiler chicken farm is very sensitive to the increase in operating expenses and decrease in the chicken selling price so that the breeders should carefully pay attention to the contract with the partnership company in order to avoid losses.
REFERENCES Brigham FE, Houston JF. 2006. Fundamentals Of Financial Management. Dasar-Dasar Manajemen Keuangan. Ali A. Yulianto, penerjemah. Jakarta: Salemba Empat. Dinas Peternakan Jawa Timur 2013. Data statistik. http://disnak.jatimprov.go.id/web/index.php/ layananpublik/datastatistik [24 Juli 2013]. Daryanto A. 2009. Dinamika Daya Saing Industri Petrnakan. Bogor: IPB Press.
ENTREPRENEURSHIP MANAGEMENT
Gittinger JP. 1986. Analisa Ekonomi Proyek-Proyek Pertanian. Jakarta: UI- Press. Hadi PS. 2002. Analisis investasi kandang tertutup Dan terbuka peternak ayam broiler Plasma PT Gema Usaha Ternak Yogyakarta [tesis]. Yogyakarta: Universitas Gajah Mada. Nursinah IZ, Lutfiadi R, Mustaiem. 2012. Analisis inansial ayam ras pedaging (kasus pembesaran ayam ras pedaging di Kecamatana Bekasi Barat). CEFARS 3(2):36–45. Sarianti T, Sasongko H, Ratnawati A. 2008. Aplikasi NPV at risk dalam analisis kelayakan finansial budidaya jamur tiram putih di Kabupaten Bogor Jawa Barat. Jurnal Manajemen & Agribisnis 5(2):73–86. Subkhie H, Suryahadi, Saleh A. 2012. Analisis kelayakan usaha peternakan ayam pedaging dengan pola kemitraan di Kecamatan Ciampea Kabupaten Bogor. Manajemen IKM 7(1):54–63. Suratman, 2001. Studi Kelayakan Poyek. Yogyakarta: J&J Learning. Soeharto. 1990. Ilmu Usaha Tani. Yogyakarta: BPFE. Syamsudin L.2004. Manajemen Keuangan Perusahaan. Jakarta: PT Raja Grafindo Persada. Zuraida R, Rohaeni ES, Hikmah Z. 2006. Prospek pengusahaan ayam pedaging pada Kotamadya Banjarbaru, Kalimantan Selatan: kasus di Desa Palam Kecamatan Cempaka, Kota Banjarbaru, Kalimantan Selatan. dalam Seminar Nasional Teknologi Peternakan dan Veteriner. Kalimantan Selatan: Balai Pengkajian Teknologi Pertanian.
_______________________ WORLD TECHNOLOGIES _______________________
9
STRATEGY FOR Business Portfolio Development OF PT Sekar Laut, Tbk. Homisah*)1, Idqan Fahmi**), and Ahmad Mukhlis Yusuf***) PT Perusahaan Industri Ceres Jl Raya Narogong Km 7, Bojong Menteng, Rawalumbu, Bekasi, 17117 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus IPB Dramaga, Bogor 16680 ***) Binus Business School The Joseph Wibowo Center, Hang Lekir I No. 6, Senayan, Jakarta 10270 *)
ABSTRACT PT Sekar Laut, Tbk. (PTSL), as a local company, has three main business units including snack crackers, cooking spices and private label. Due to the potentials of Indonesia, it is expected that PTSL can upscale its competitive advantage and has an ability to compete with global companies as well. The objectives of this research were 1) analyzing relative positioning of PTSL compared with market leaders in snack and cooking spices industries, 2) analyzing Life Cycle phase per business unit, 3) analyzing positioning of each product category in portfolio matrix, 4) formulating strategic recommendations to the management for each product category of PTSL. The method used in this study was descriptive analysis. The analysis tools used in this study were BCG matrix, Life Cycle model, IFE, IFI and GE matrix. The results showed that relative positioning of crackers and cooking spices business units in BCG matrix is in Question Marks quadrant. The results of Life Cycle model for snack crackers, cooking spices, and private label showed that they are in Growth phase. The result of portfolio analysis by GE matrix showed that shrimp cracker and fish cracker product categories are in Selective Growth quadrant. Vegetables cracker, cooking spices, uleg chili sauce, burger buns are in Investment and Growth quadrant. The strategic recommendation for shrimp and fish crackers is to identify the growth segment, aggressive investment and uphold position. The strategic recommendations for vegetable cracker, cooking spices, uleg chili sauce, and burger buns are growth, seeking for dominance and maximum investment. Keywords: portfolio analyzing, crackers, cooking spices, uleg chili sauce, burger buns
ABSTRAK PT Sekar Laut, Tbk (PTSL) merupakan perusahaan lokal yang memiliki tiga unit bisnis yaitu unit bisnis snack kerupuk, food seasoning dan private label. PTSL diharapkan mampu meningkatkan keunggulan kompetitifnya sehingga mampu bersaing dengan perusahaan global yang masuk ke Indonesia, dikarenakan potensi Indonesia. Tujuan dari penelitian ini adalah 1) analisis posisi relatif PTSL terhadap market leader perusahaan industri snack dan food seasoning, 2) analisis metode Life Cycle unit bisnis PTSL, 3) analisis posisi kategori produk utama PTSL dalam matriks portofolio, 4) memberikan rekomendasi alternatif strategi pengembangan portofolio per kategori produk PTSL. Metode yang digunakan dalam penelitian ini adalah analisis deskriptif. Alat analisis yang digunakan dalam penelitian ini adalah matriks BCG, model Life Cycle, IFE, IFI dan matriks GE. Hasil analisis matriks BCG menunjukkan bahwa posisi relatif unit bisnis snack kerupuk dan food seasoning berada pada kuadran Question Mark. Hasil analisis life cycle unit bisnis kerupuk, food seasoning dan private label, ketiganya berada pada fase Growth. Hasil analisis portofolio menggunakan matriks GE memperlihatkan bahwa kategori produk kerupuk udang dan kerupuk ikan berada pada kuadran Pertumbuhan Selektif. Kategori produk kerupuk sayur, sambal uleg, bumbu siap saji dan roti burger, semua berada pada kuadran Investasi dan Pertumbuhan. Rekomendasi strategi untuk kerupuk udang dan kerupuk ikan adalah identifikasi segmen yang tumbuh, investasi agresif dan mempertahankan posisi. Rekomendasi strategi untuk kerupuk sayur, bumbu dapur, sambal uleg dan roti burger adalah tumbuh, mencari dominansi dan investasi maksimum. Kata kunci: analisis portofolio, snack kerupuk, sambal uleg, bumbu siap saji, roti burger
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
80
INTRODUCTION Indonesia is a country that has a potential to be the global market targets due to its population which made it as the world's 4th largest country with a population of 237 million in 2012. Indonesia is also able to maintain a stable macroeconomic environment, and based on the data obtained from BPS, at the end of 2012, the GDP of Indonesia grew by 6,23 % and by 5,7 % at the end of 2013. Another interesting potential of Indonesia is that the number of middle class population increased sharply. The data obtained from the Indonesian Consumer Goods and Retail Report, EIU stated that in 2012, the population of middle class Indonesia reached 45 million, and by 2030 it is estimated to rise by 300% reaching135 million people where almost 80% of household income in Indonesia will reach over US $5.000 a year in 2017. Due its potential to become the global market target, the local companies should increase the potentials for their company in order to have a competitive edge against the competition with global companies. Lack of ability to market and create value-added brands and has caused most of the local companies to experience difficulties to grow. This condition has been experienced by PT Sekar Laut, Tbk. (PTSL) as a local Indonesian company which still exists, although it was founded in 1966 with its initial business as a manufacturer of prawn crackers. PTSL currently has three focused business units, namely crackers, cooking spices and private label. The snack cracker business unit has three main product categories namely shrimp crackers, fish crackers and vegetable crackers. The cooking spices business unit has two main product categories of ready product spices and uleg chili sauce launched at the beginning of 2013. The business unit with a private label product category is burger buns in which it produces burger buns for several international franchises such as McDonald, KFC, Burger King, and AW. Snack cracker business unit experienced a downward trend in sales growth in the period of 2011/10 where sales growth reached 40%, while in the period of 2013/12, the growth was only 22%. This business unit usually contributes > 80% of the total sale; however, in 2013 it only contributed 70% of total sales. The contribution of cooking spices business unit in 2013 increased sharply by 21% compared to that in the year 2012 which amounted to only 6%, but the sales growth increased significantly by 451% when compared to the
ENTREPRENEURSHIP MANAGEMENT
previous period, due to the launching of a new product category i.e. uleg chilie sauce. This high increase has directed PTSL management to focus on investment in the business unit of cooking spices instead of cracker snack in the next 5 years. The management decision needs to be supported by an analysis to see the potential of the business unit of cooking spices so that it as a priority allocation of resources as well as how potential cracker business unit as the backbone of the company, also the potential of private label business unit. The company also needs to know how to position the industry attractiveness and business strengths of each major product category PTSL. Based on the description above, this research needs to be conducted to address the following issues: 1. What is the relative position of snack cracker and cooking spices business unit portfolios against their competitors? 2. How is the life cycle of the business units of snack crackers, cooking spices and private label? 3. What is the relative position of the categories of crackers, ready made chili seasoning and burger buns in the portfolio matrix? 4. What alternative strategies can be used by PTSL for the development of portfolios of product categories of prawn crackers, fish crackers, vegetable crackers, uleg chili sauce, ready made cooking spices, and burger buns? The objectives of the research were as follows: 1) Analysis on the relative position of snack cracker and cooking spices business unit portfolios against their competitors; 2) analysis on the life cycle of the business units of snack crackers, cooking spices and private label; 3) analysis on the relative position of the categories of crackers, ready made chili seasoning and burger buns in the portfolio matrix; 4) formulation of alternative strategies that can be used by PTSL for the development of portfolios of product categories of prawn crackers, fish crackers, vegetable crackers, uleg chili sauce, ready made cooking spices, and burger buns. The scope of this study focused on the analysis of the relative positions of business units of cracker snacks and cooking spices against the the market leader. This study also analyzed the Life Cycle model for the business units of cracker snacks, cooking spices and private label, and this study also analyzed the portfolio analysis of product categories of prawn crackers, fish crackers, vegetable crackers, ready made food seasong,
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FOR BUSINESS PORTFOLIO DEVELOPMENTOF PT SEKAR LAUT, TBK.
uleg chili sauce and burger buns as well as the strategy development portfolio. The recommendations for the portfolio development strategy are provide; however, the implementation and evaluation phases will be entirely conducted by the PTSL management. This research is expected to provide integrated recommendations from a number of analysescarried out. The BCG matrix analysis result shows the relative position of the business unit if compared with the main competitors supported by the result of the internal data analysis using the Life Cycle model, directing the strategic recommendations based on the GE matrix GE result to become more precise. The previous research used the IFE, IFI and GE matrixes to provide the strategic recommendations without analyzing the position against competitor products or product stages in its life cycle. Another study was also conducted with different product categories using the same analytical tools of BCG matrix, Life Cycle model, IFE, IFI and GE matrix; nevertheless, the recommendation was based on the GE matrix since the analysis included external and internal factors.
METHOD Data types and sources in this study were primary and secondary data in the qualitative and quantitative forms obtained from the PTSL management, literature studies, reports/ articles. The primary data of the collection of information were obtained through questionnaires filled in by the internal respondents of the management. The secondary data such as sales data and management policies were obtained from the annual report and from the PTSL management.
81
formulation of the strategy was based on GE matrix, after the analysis of the relative position of each product category was conducted. The formulation of this strategy involves the business unit information from the analysis results of the BCG matrix and Life Cycle model to strengthen the basis of decision strategies. The GE matrix analysis results are used as the basis for the formulation of strategies since they represent internal and external factors. The managerial implication of GE matrix is a long-term strategy and focused on the priority of the allocation of resources to the business portfolio. A strategy is a plan that is united, broad and integrated and connects the superiority of the corporate strategy to the environmental challenges, and it is designed to ensure that the main goal of the company is properly implemented by the organization. Business strategies can include geographic expansion, diversification, acquisition, product development, market penetration, divestitures, employee rationalization, liquidation and joint ventures. The strategies require decisions from the top-level management and great resources of the company, and they influence the prosperity of the company in the long term and in its future orientation. These strategies have multifunctional and multidimensional consequences as well as the need to consider external and internal factors faced by the company (David, 2013). Wheelen and Hunger (2012) define the management strategy as a series of managerial decisions and actions that determine the long term performance of a company or organization; moreover, it is an ongoing and gradual process that aims to keep the organization as a whole in accordance with the environment.
This study is a direct assessment of the case study occurring in PTSL in the development of its portfolio of product categories. Sampling techniques were carried out with a non-probability sampling approach (sampling without opportunities) through the judgment/ purposive sampling technique (intentional sampling). This technique was used to determine the individuals who would become the respondents for the in-depth interviews.
Portfolio is the ability of the company to use shared costs and appropriate allocation of the existing funds, and in some cases, it is termed as "giving new money" to one or several controlled areas (David et al. 2008). The portfolio analysis can be used by the manager in evaluating the company with diverse businesses so that it can allocate resources appropriately and obtain a balanced and growing portfolio (Carpenter and Sanders, 2009).
The performance of the company was analyzed using the BCG matrix and analysis model Life Cycle. Shaw (2012) states that the products in BCG matrix are directly related to the model phase of Life Cycle. The
According to Wheelen and Hunger (2012), the portfolio analysis is commonly used in the formulation of strategies because they have the advantages of:
_______________________ WORLD TECHNOLOGIES _______________________
82
ENTREPRENEURSHIP MANAGEMENT
• Encouraging the top management to evaluate each SBU (strategic business unit) separately, set and allocate resources to each SBU properly. • Encouraging the use of information derived from an external company in decision making by the management. • Providing financial information at the time the company will carry out expansion and growth • Facilitating the interpretation of the position of a product or SBU Sumarno (2011), Rachmawati (2012) and Dung (2012) analyzed the product portfolios by using the analytical tools of BCG and GE matrixes and PLC model. The PLC model was used in forecasting and innovating products like research conducted by Yoo (2010), Partner, Chauduri and Chowdhury (2012), Bakker (2013), Sharma (2013) and Kaldasch (2015). Amatulli, Caputo and Guido (2011), Mokaya, Wakhungu and Gikunda (2012) and Sun (2015) conducted a study in the application of GE matrix strategy for the product portfolio. Muzi and Wong (2013) conducted a study on Haier business portfolio and Khan et al. (2015) conducted a portfolio analysis for Apple Inc. using PEST, SWOT and BCG matrix analysis tools.
Udo-Imeh, Edit and Nani (2012), Makarova and Krizanov (2013) used a matrix analysis tool for BCG and GE in analyzing the product portfolios, while Srivastava and Prakash (2011) and Debrecht and Levas (2014) used the BCG matrix. Shaw (2012) created marketing strategy planning by using SWOT, PLC and BCG matrix analysis tools. Pham et al (2015) used analyses of IFE, EFE, IE matrix, SWOT and QSPM to formulate a strategy for Batik Tulis. PTSL is required to conduct analyses on the focused business units and product categories and to determine appropriate development strategies for them. The concept of the determination of the strategy, according to David (2013), consists of three stages. The first stage is the input stage which can be carried out through analysis on the internal and external factors or through the collection of both supporting primary and secondary data. The second stage is the matching stage which is a continuation of the first stage of the process where information is processed and then mapped into some analysis models relevant to this research study in which in this study the mapping will be conducted in the BCG and GE matrixes and in the form of PLC diagram. The third stage is the decision stage which is the results of thorough analyses of several analysis tools used to produce alternative strategies as presented in Figure 1.
Vission and missions PT Sekar Laut, Tbk.
Business unit Kerupuk
Business unit of cooking spices
Competitive advantage
Identification of external factors
Identification of internal factors
Market of snack and cooking spices industries (BCG Matrix) Business unit performance (BCG and PLC Matrix)
Portfolio analysis of business units and product categories
Analysis of business strength of product category (GE Matrix)
Market competitors in snack and cooking spices industries (BCG Matrix) Analysis of industrial attractiveness of product categroy (GE Matrix)
Development strategies of PT Sekar Laut, Tbk. product categories
Figure 1. Conceptual framework
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FOR BUSINESS PORTFOLIO DEVELOPMENTOF PT SEKAR LAUT, TBK.
83
RESULTS
a. Business unit of cracker Snacks
The analysis results of each business unit and product category based on the method used are as follows:
Garudafood snack industry is a market leader that is in star quadrant while Indofood as the best competitors is still in the question mark quadrant but close to the Star quadrant. Other competitors such companies Siantar Top, Tiga Pilar Sejahtera (TPS) is also located question mark quadrant like PTSL with its Finna snack crackers. Mapping of PTSL company portfolio and its competitors at BCG matrix can be illustrated in Figure 2. b. Business unit of cooking spices
High
Low
Market share relative (cash generation) Description:
High
Heinz ABC, the market leader for the cooking spices industry, star quadrant, while Unilever, the best competitor of Heinz ABC is in question mark quadrant but close to Star quadrant. Other competitors such as Indofood Company is also located in question mark quadrant; moreover, PTSL with its Finna cooking spices is also located in question mark quadrant with its relatively very small market share of 0,02 compared to that of Heinz ABC as the market leader in cooking spices industry. Mapping of portfolio of PTSL Finna cooking spices and its competitors in BCG matrix can be illustrated in Figure 3.
The market growth rate (cash usage)
High Low
The market growth rate (cash usage)
The basic principle of analysis using BCG matrix is to divide an area with two vertical and horizontal lines into four areas (quadrants). The horizontal line depicts the relative position of the market share held by the company while the vertical line indicates the market growth rate. Each quadrant illustrates the position of alternative products and product development strategies that should be carried out by the company (Grunic and Kuhn, 2011). • Stars quadrant, representing business units or product lines that have high industrial appeals and a strong competitive position. • Dogs quadrant, representing the business units or business lines that have a low industrial attractiveness and a weak competitive position as well. • Question marks quadrant, representing the business units that have high industrial appeals but have a weak competitive position. • Cash cows quadrant, representing business units or product lines that have low industrial attractiveness but have a strong competitive potential
Low
The position of Business Unit of PTSL in the BCG Matrix
Low
High
Market share relative (cash generation) Description:
A. Garuda Food
D. Tiga Pilar Sejahtera
A. Garuda Food
D. Tiga Pilar Sejahtera
B. Indofood
E. PTSL
B. Indofood
E. PTSL
C. Siantar Top
Figure 2. Position of cracker business unit of PTSL in BCG Matrix
C. Siantar Top
Figure 3. Position of business unit of PTSL cooking spices in BCG Matrix
_______________________ WORLD TECHNOLOGIES _______________________
84
ENTREPRENEURSHIP MANAGEMENT
Life Cycle Analysis Method Kotler (2011) defines life cycle analysis model in an attempt to identify stages of sales of products in which at each stage different opportunities and problems mainly related to product marketing strategy are encountered. This is expected to be able to recognize stages that will help the company formulate a good marketing strategy. Life cycle analysis of PTSL business units of crackers, cooking spices and private label PTSL aims to determine the maturity level of each business unit whether it is in a phase of introduction, growth, maturity or decline. Shaw (2012) states that a business unit in BCG matrix is directly related to the phase of life cycle analysis model. Business units which are in quadrants of question mark and star in BCG matrix are in the early phases of the life cycle with recommended strategies of introduction and growth. Recapitulation of the life cycle model analysis can be seen in Table 1. The mapping results can be seen in Figure 4. Table 1. Analysis result of life cycle model Business unit Crackers Cooking spices Private label
Maturity product ∆ Growth Phase (+) Growth (+) Growth (+) Growth
Portfolios of Product Categories of Crackers, Cooking spices and Burger Buns in the GE Matrix
The vertical axis shows the strength of the business which is a subjective assessment based on the key success factors that are fully controlled by the company. This determines the position of a business or product unit in the industry such as market share, salesperson, marketing, customer service, R&D, production processes, distribution channels, financial resources, image, product line breadth, product quality and management competencies. The data processing results of the research conducted on each of product categories in the business units of crackers, cooking spices and private labels can be delivered in detail. a. Finna prawn crackers The measurement results of the industry attractiveness and business strength of the Finna prawn cracker product categories show that the total value of the attractiveness of the industry for the product is at 3,55 (intermediate category) and the total value of the business strength of this product amounted to 3,77 (high category). This puts the product in the GE matrix of quadrant II that is in a selective growth position.
Product sales
Hax and Majluf (1991) states that GE matrix has two axes, namely horizontal and vertical axis. The horizontal
axis of the matrix attractiveness of the industry which is a subjective assessment is based on the external factors that cannot be controlled by the company, and this was aimed at describing the industry structure and competence in which the business or product unit operates. This includes market size, market growth rate, industry cycle, competition structure, barriers for the entry of the industry, industry profitability, technology, inflation, regulations and policies, human resource availability, and social, political, environmental and legal issues.
Introduction Crackers
Growth
Maturity
Food seasoning
Decline Private label
Figure 4. Mapping of life cycle of business units of crackers, cooking spices and private label of PTSL
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FOR BUSINESS PORTFOLIO DEVELOPMENTOF PT SEKAR LAUT, TBK.
b. Finna fish crackers The measurement results of the industry attractiveness and business strength of the Finna fish cracker product categories show that the total value of the attractiveness of the industry for the product is at 3,65 (intermediate category) and the total value of the business strength of this product amounted to 4,28 (high category). This puts the product in the GE matrix of quadrant II that is in a selective growth position. c. Finna vegetable crackers The measurement results of the industry attractiveness and business strength of the Finna vegetable cracker product categories show that the total value of the attractiveness of the industry for the product is at 3,69 (intermediate category) and the total value of the business strength of this product amounted to 3,87 (high category). This puts the product in the GE matrix of quadrant I that is in investment and growth position. d. Finna instant cooking spices The measurement results of the industry attractiveness and business strength of the instant cooking spices product categories show that the total value of the attractiveness of the industry for the product is at 3,74 (intermediate category) and the total value of the business strength of this product amounted to 4,25 (high category). This puts the product in the GE matrix of quadrant I that is in investment and growth position. e. Finna uleg chili sauce The measurement results of the industry attractiveness and business strength of the Finna uleg chili sauce product categories show that the total value of the
85
attractiveness of the industry for the product is at 3,74 (intermediate category) and the total value of the business strength of this product amounted to 4,27 (high category). This puts the product in the GE matrix of quadrant I that is in investment and growth position. f. Burger buns The measurement results of the industry attractiveness and business strength of burger bun product categories show that the total value of the attractiveness of the industry for the product is at 3,88 (intermediate category) and the total value of the business strength of this product amounted to 4,28 (high category). This puts the product in the GE matrix of quadrant I that is in investment and growth position. The positions of the PTSL product categories in GE Matrix are shown in Table 2. Mapping of each product category in GE matrix can be seen in Figure 5. The order of the size of the circle leads to the order of the percentage contribution of total sales of each product category. Managerial Implications From the analysis results from BCG matrix, it can be seen that the position of PTSL business units of snack crackers and cooking spices is among the market leaders of snack and cooking spices industries that is in question mark position, which means that PTSL business units of snack crackers and cooking spices are in a high growth market but with a relatively very low market share. This is confirmed by the results of the analysis of life cycle models for these business units in which they are located in the growth phase; in addition, the private label business unit is also located in the growth phase.
Table 2. Position of PTSL product categories in GE Matrix Product category Prawn crackers Fish crackers Vegetable crackers Cooking spices Uleg chili sauce Burger buns
Attractiveness of the industry Value Category Rank 3,55 Intermediate 6 3,66 Intermediate 5 3,69 High 4 3,74 High 2.5 3,74 High 2.5 3,88 High 1
Value 3,77 4,28 3,87 4,25 4,27 4,28
Business strength Category Rank High 6 High 1,5 High 5 High 4 High 3 High 1,5
Position of GE Matrix II II I I I I
_______________________ WORLD TECHNOLOGIES _______________________
86
ENTREPRENEURSHIP MANAGEMENT
Industry attractiveness
5,0
3,67 High
Intermediate
Low
2,33
intermediate
3,67
Weak
Business Stregth
Strong
5,0
1,0
2,33
1,0 Finna prawn crackers Finna fish crackers Finna vegetable crackers
Instant cooking spices Uleg chili sauce Burger buns
Figure 5. Mapping of PTSL product categories in GE Matrix The third position this business unit has the opportunity to grow and develop to be successful as long as all the available resources of the company's investments are managed effectively and efficiently in the development. Given the fact that the company's resources are limited, they must be used optimally for the identification and development of the internal factors or strong products so that it can be the competitiveness strength of the company to make this business unit as a market leader. The analysis results of the PTSL six major product categories using GE matrix generating alternative strategies such as in Table 3. Determination of the prioritization of resource management strategy is determined by the recommendations of GE matrix generating alternative strategies as follows: 1. Product category strategy of Finna prawn crackers The rapid development trend of healthy snacks due to awareness of the importance of healthy food which is quite high among the Indonesian people, especially for the urban upper middle class has directed the PTSL management to invest for the product category of prawn crackers in this growing segment. The main
attraction of this industry is technology and consumer influence; therefore, the management can focus more on aggressive investment in technology improvement and purchase of machinery, and it can also innovate with a focus on product development of RTE (ready to eat) prawn crackers and prepare for other resources, including labor, promotion costs and distribution channel addition. Packaging must also follow the development and reflects premium quality of snack products. PTSL is also directed to maintain and improve the position with a market share of 1% in the snack industry, which is based on in-depth interviews with the marketing team where Finna cracker product has a 75% market share in the cracker industry. 2. Product category strategy of Finna fish crackers Trend for healthy snacks in the Indonesian society, especially in the urban middle class has directed PTSL to invest in terms of the selection of high-technology machines to produce healthy snacks preferred by consumers, to innovate so that product differentiation can be more recognized and enjoyed, and follow the development trend of snack packaging for the middle class consumers.
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FOR BUSINESS PORTFOLIO DEVELOPMENTOF PT SEKAR LAUT, TBK.
The management can focus more on aggressive intensive to improve technology by the purchase of high-quality machine for the development of innovative types of fish, RTE (ready to eat) fish cracker products and preparation of other resources, including labor, promotion costs and additional distribution channels. PTSL business major strengths for this product category include high-quality products, well known Finna brand and product differentiation which determine the success of the company in healthy competition with its competitors. Its position as the market leader in the cracker industry should be maintained, and based on the in-depth interviews with the marketing team, Finna cracker product Finna has 75% market share in the industry although its market share is only 1%; therefore, it should be improved as well. 3. Product category strategy of Finna vegetable crackers The PTSL management has been directed to invest in the growing middle class segment by adding machine and investing in a new factory in Semarang to increase the tonnage production volume of the vegetable crackers commencing in early 2014. There are many home industries that produce these types of crackers but without standardized product quality in terms of raw materials, hygiene and strong flavor as well as local distribution. PTSL with its existing resources in the form of machinery, labor and innovation may surpass the weaknesses of the local companies of vegetable crackers and dominate the market. 4. Product category strategy of Finna instant cooking spices Priority of investment has directed PTSL management to grow and increase investments by looking for superior products that could compete with its competitors and generate high profits that could support other products in the developing world. The company also needs to increase brand awareness for the product category of Finna instant cooking spices besides the widely known Finna crackers. PTSL management is recommended to seek domination by focusing superior instant cooking spices products with the best local distinctive flavors, with the promising earnings to be supported more in terms of resources. For example, rendang and Soto seasonings are very commonly known by the community but they are difficult and take a long time to prepare.
87
5. Product category strategy of Finna uleg chili sauce A very significant increase in the number of lowermiddle class of the urban population of Indonesia where both husband and wife work has directed toward the prospect of uleg chilled sauce that will be developed following the trend of urban middle class couples. The PTSL management has been aware with this condition and conducted research to produce home-made sauce, invested additional machine to produce chili sauce with traditional flavors and expanded the factory in Sidoarjo. R & D team is also directed to develop some new products of traditional chilled sauces from the existing products. Dominance that can be recommended is to distribute the uleg shrimp paste chili sauce sachets to the traditional and small grocery store channels. The category of uleg chili sauce is prioritized for healthy competition to raise awareness of the existing Finna uleg chilled sauce through promotions of ATL and BTL by taking into account healthy profits. 6. Product category strategy of burger buns The analysis result of GE matrix has directed PTSL to add its factory machine capacity with high technology to balance its production with its market growth rate of fast food retail, especially in the eastern part of Indonesia to support the needs of burger bun products in the region.
CONCLUSIONS AND RECOMMENDATIONS Conclusions The conclusions that can be drawn from this study state that: (1) the results of the analysis using BCG matrix indicate that the relative positions of business units of crackers and cooking spices are in question mark quadrant, which means that these products are in high market growth; however, they have a relatively very low market share; (2) the analysis results of the life cycle model indicate that the business units of crackers, cooking spices and private label are in the growth phase. The results of both analyses are in accordance with the recommendations that the business unit quadrant based on BCG matrix analysis results is in line with the business unit phase in life cycle model analysis. These results direct the business units to have
_______________________ WORLD TECHNOLOGIES _______________________
88
the opportunity to grow and develop to be successful business units provided that all available resources for the investment company are managed effectively and efficiently; (3) The analysis results of portfolios of product categories GE matrix recommends priority investment strategy for each product category in the main business units of PTSL. Product categories of prawn crackers and fish crackers are in Selective growth quadrant while the product categories of vegetable crackers, uleg chili sauce, instant cooking spices, and burger buns are in the Investment and growth quadrant; (4) Recommendation strategies for product categories of prawn crackers and fish crackers are identifications of the growing segments, aggressive investments and position maintenance. Strategies recommended for the product categories of vegetable crackers, uleg chili sauce, instant cooking spices and burger buns are growing, seeking domination, and obtaining maximum investment. These strategy recommendations are expected to assist the PTSL management so that it can increase the opportunities to add market share in both the industries of snacks and cooking spices and are also able to follow the growth of fast-food restaurants for the burger bun product category. Recommendations This research has recommended an integrated strategy from the several analytical tools, which distinguishes it from the previous studies. Based on the recommendations given for this research, it should be carried out with a more detailed analysis of the portfolio by exploring the margins and profitability for every business unit and product category so that more in-depth recommendations could be given related to the investment priorities so that the continuity of the company is guaranteed. Life cycle analysis should also be directed to obtain data for every product category so as to determine its phase so that recommendations for investment priority strategies can become sharper because they are combined with the life cycle phase of each product category. The following study is expected to be directed toward the market side for detailing strategies that have been formulated in this study, and this is also expected focus on supply chain related to the availability of primary fishery and agricultural raw materials which are fluctuated. Also, the following research can study what strategies PTSL can apply
ENTREPRENEURSHIP MANAGEMENT
to export its products abroad. The writer becomes highly motivated because the research was published in the journal and becomes the basis to carry out other research and publish the results.
REFERENCES Amatulli C, Caputo T, Guido G. 2011. Strategic Analysis through the General Electric/McKinsey Matrix: An Application to the Italian Fashion Industry. International Journal of Business and Management 6(5):61–68. http://dx.doi. org/10.5539/ijbm.v6n5p61. Bakker P. 2013. The Life Cycle of a Free Newspaper Business Model in Newspaper-Rich Markets. Journalistica NR 1: 33–48. Carpenter MA, Sanders WG. 2009. Strategic Management A Dynamic Perspective Concept and Cases. 2nd Ed. London: Prentice-Hall International. David FR. 2013. Strategic Management Consept and Cases 14th Edition. England: Pearson Education Limited. David PK, Russell DS, Justin B. 2008. PortfolioAnalysis Methods for Assessing Capability Options. California: Rand Corporation. Debrecht D, Levas M. 2014. Using the Boston Consulting Group Portfolio Matrix to Analyze Management of a Business Undergraduate Student Program at a Small Liberal Arts University. Journal of Higher Education Theory and Practice 14(3): 65–69. Dung VA. 2012. Brand and Product Divestiture: A Literature Review and Future Research Recommendations. Journal of Management & Marketing Challenges for the Knowledge Society 7(1): 107–130. Grunig R, Kunh R. 2011. Process-based Strategic Planning. 9th Ed. New York: SpringerHeidelberg.http://dx.doi.org/10.1007/978-3642-16715-7. Hax AC, Majluf NS. 1991. The Strategy Concept and Process: A Pragmatic Approach. New Jersey: Prentice-Hall. Kaldasch J. 2015. 2015. The Product Life Cycle of Durable Goods. British Journal of Economics, Management and Trade 10(2):1–17. http:// dx.doi.org/10.9734/BJEMT/2015/20395.
_______________________ WORLD TECHNOLOGIES _______________________
STRATEGY FOR BUSINESS PORTFOLIO DEVELOPMENTOF PT SEKAR LAUT, TBK.
Kotler P. 2011. Marketing Management Millenium Edition. 10th Ed. New Jersey: Prentice-Hall. Masarova G, Krizanova A. 2013. Innovation of Company's Product Portfolio in the Field of Construction Industry in Slovak Condition. Journal of the 7th International Days of Statictics and Economics, Prague. September 19-21, 2013: 966-976. Mitra S, Chaudhuri SRB, Chowdhury S. 2012. Product Prioritization Matrix: A Strategic Tool, To Plan Brand Promotion Priority for Optimized Business Growth. International Journal of Management & Information Technology 1(3): 80–88. Mokaya SO, Wakhungu B, Gikhunda RM. 2012. The Application of MKinsey Matrix in Determination of Route Attractiveness and Resource Allocation in Kenya Airways. International Journal of Humanities and Social Science 2(3): 259–268. Muzi HE, Wong KC. 2014. An Analyrical Study on Strategic Management of Haier. Journal of Contemporary Management 128(2): 1–14. Khan UA, Alam MN, Alam S. 2015. A Critical Analysis of Internal and External Environment of Apple Inc. International Journal of Economics, Commerce and Management 3(6):955–961. Rahmawati S. 2012. Strategi Pengembangan Portofolio Produk Berdasarkan Prinsipal Pada Perusahaan Distributor PT XYZ [tesis]. Bogor: Program Manajemen dan Bisnis, Institut Pertanian Bogor. Sharma N. 2013. Marketing Strategy on Different Stages PLC and Its Marketing Implications on FMCG Products. International Journal of Marketing, Financial Services & Management Research 2(3): 121–136.
89
Shaw EH. 2012. Marketing Strategy from the Origin of the Concept to the Development of a Conceptual Framework. Journal of Historical Research in Marketing 4(1): 30–55.http://dx.doi. org/10.1108/17557501211195055. Srivastava R, Prakash A. 2011. Growth-Share Matrix as a Tool for Potfolio Planning: Evidence from the Indian Telecummunication Services Industry. The IUP Journal of Business Strategy 8(2): 22– 33. Sumarno. 2011. Analisis Portofolio Produk Tabungan dan Strategi Pengembangannya (Studi Kasus pada PT bank Bukopin, Tbk) [tesis]. Bogor: Program Manajemen dan Bisnis, Institut Pertanian Bogor. Sun Q. 2015. Evaluating Sustainable Urbanization and Coordinated Development – A case study of Liaoning in China. International Journal of Smart Home 9(4): 73–84. http://dx.doi. org/10.14257/ijsh.2015.9.4.08. Suryani IE, Anggraeni L, Suryadi U. 2015. Strategy Formulation for Developing Batik Tulis. Indonesian Journal of Business and Entrepreneurship 1(1): 23–31. http://dx.doi. org/10.17358/IJBE.1.1.23 Udo-Imeh PT, Edet WE, Anani RB. 2012. Portfolio Analysis Models: A Review. European Journal of Business and Management 4(18): 101–117. Wheelen TL, Hunger JD. 2012. Strategic Management and Business Policy 13th Edition. New Jersey: Prentice-Hall. Yoo CS. 2010. Product Life Cycle Theory and the Maturation of the Internet. Norton University of Law 104(2): 641–670.
_______________________ WORLD TECHNOLOGIES _______________________
10
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY Tantri Wijayanti*), Musa Hubeis**), and Muksin***) Study Program of Tourism Bussiness, Politeknik Negeri Banyuwangi Jalan Raya Jember KM 13, Kabat Banyuwangi **) Department of Management, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 ***) Study Program of Agribusiness, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 *)
ABSTRACT This research was aimed to identify the agrotourism potential in Jember Regency, to identify the condition of internal and external environment of Sukorambi Botanic Garden. The research used the Importance Performance Analysis (IPA) method to find out the level of the visitors’ interest and satisfaction. For the internal and external analyses, the Internal Factor Evaluation (IFE) method, the External Factor Evaluation (EFE) method, Strength Weakness Opportunity and Threat (SWOT) and the Analytic Hierarchy Process (AHP) were used to determine the strategies for marketing Sukorambi Botanic Garden. Three resource persons were used by purposive sampling technique. Thirty respondents were used for analytical level of interest by distributing questionnaires to visitors. The results of the research showed that the priorities of marketing Sukorambi Botanic Garden were 1) the strategy to maximize the concept of recreation while studying such as crop cultivation and animal farming, 2) the strategy to increase the number of outbound games, 3) the strategy to coordinate intensively with stakeholders for improvement and sustainable development, 4) the strategy to get a loan from a financial institution to increase capital, 5) the strategy to optimize promotion activities, (6) the strategy to improve the quality of community services through improved performance and transportation facilities, 7) the strategy to improve the quality of services through trainings for the employees to improve the company’s management system, 8) the strategy to realize facility development on the remainder of the land accompanied by improvement of existing facilities, and 9) the strategy to optimize online promotion activities. Keywords: Agrotourism, marketing development strategy, Sukorambi Botanic Garden, AHP, SWOT
ABSTRAK Penelitian ini bertujuan untuk mengidentifikasi potensi agrowisata di Kabupaten Jember, mengidentifikasi kondisi lingkungan internal dan eksternal Taman Botani Sukorambi dan menentukan prioritas strategi pengembangan pemasaran agrowisata Taman Botani Sukorambi. Penelitian ini menggunakan metode Importance Performance Analisys (IPA), untuk mengetahui tingkat kepentingan dan kepuasan pengunjung, analisis internal dan eksternal menggunakan metode analisis Internal Factor Evaluation (IFE), Eksternal Factor Evaluation (EFE), Strenght Weakness Opportunity and Threat (SWOT) dan Analytic Hierarchy Process (AHP) untuk menentukan strategi pemasaran Taman Botani Sukorambi. Narasumber ahli yang digunakan sebanyak tiga orang dengan teknik penarikan contoh yang digunakan adalah purposive sampling. Responden yang digunakan untuk analisis tingkat kepentingan adalah sebanyak 30 orang dengan menyebarkan kuisioner kepada pengunjung. Hasil penelitian menunjukkan bahwa prioritas strategi pemasaran Taman Botani Sukorambi adalah 1) strategi memaksimalkan konsep rekreasi sambil belajar seperti budidaya tanaman dan beternak, 2) strategi penambahan jumlah permainan outbond, 3) strategi koordinasi yang intensif dengan stakeholders untuk perbaikan dan pengembangan berkelanjutan, 4) strategi melakukan peminjaman kepada lembaga keuangan untuk meningkatkan modal, 5) strategi optimalisasi kegiatan promosi 6) peningkatan kualitas pelayanan melalui peningkatan kinerja, dan kemudahan akses transportasi, 7) strategi peningkatan kualitas pelayanan melalui pelatihan bagi karyawan, memperbaiki sistem manajemen perusahaan, 8) merealisasikan pengembangan fasilitas pada lahan tersisa disertai dengan pembenahan fasilitas yang sudah ada dan (9) strategi optimalisasi kegiatan promosi secara online. Kata kunci: Agrowista, strategi pengembangan pemasaran, Taman Botani Sukorambi, AHP, SWOT 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY
INTRODUCTION Agrotourism can be defined as a form of tourism activities that apply agribusiness as a tourism object with the intention to expand knowledge, recreation, and business relation in the field of agriculture. Agrotourism development that utilizes the land based on local culture is expected to be able to increase the farmers’ income as well as to reserve land resources, and to care for local culture as well as local technology (indigenous knowledge) which is generally in accordance with its natural environmental condition (Dept. of Agriculture, 2005). In the regional autonomy era, agrotourism can be developed by each region, by presenting typical agrotourism attractions according to the regional culture and condition. The increased agrotourism growth in the regions makes regional agrotourism face a high competition. One of the companies in Jember Regency that has applied agrotourism as their business unit is Sukorambi Botanic Garden. This agrotourism business unit uses the concept of recreation while studying. In carrying out this agrotourism business activity, Sukorambi Botanic Garden faces various constraints, namely the presence of competitors and fluctuation of visitor number that is unpredictable and varies every day. In 2012 the number of visitors decreased, which showed that agrotourism competitiveness was increasing. This became a threat to the company, since the existence of tourism objects depends very much on the number of visitors. Therefore, Sukorambi Botanic Garden needs a good management to maintain and develop its business. The marketing strategy in this research was carried out on the tourism object using agrotourism concept, like the one carried out by Sabrina (2013) in agrotourism business “Warso farm” in Bogor, which showed that the strategy to improve service quality and maintain a good relation with customers was an appropriate strategy for the company. This kind of research that was also conducted by Rinawati (2014) in the agrotourism of Gunung Mas Plantation PTPN VIII in Cisarua, Bogor produced a strategy of improving the marketing performance and promotion effectiveness to get more visitors. Both researches became a foundation to carry out a marketing development strategy in Sukorambi Botanic Garden agrotourism. This research was aimed 1) to identify the agrotourism potential
91
in Jember Regency; 2) to analyze the internal and external condition that includes Sukorambi Botanic Garden agrotourism in Jember; and 3) to formulate an appropriate strategy of marketing development in Sukorambi Botanic Garden in Jember.
METHODS This research was carried out for three months, from February to March 2014. The data for the research were primary and secondary. Primary data were obtained through an indepth interview with the management. The sampling technique was purposive sampling with three interviewees. The method to get samples for interest analytical rate (IPA) in this research was carried out by distributing questionnaires to visitors using convenience sampling method with 30 respondents. This research used a qualitative and quantitative descriptive method. The technique for processing and analyzing the data used IFE matrix (Internal Factor Evaluation), EFE (External Factor Evaluation), IE matrix (Internal External) SWOT (Strength Weakness Opportunity and Threat) and AHP (Analytical Hierarchy Process). The AHP method was used as a further method of determining the strategic priorities. The IPA (Importance Performance Analysis) analysis was also used to know the level of customers’ satisfaction as a role of both expectation relations that focused on importance attribute and performance evaluation. This research was started with identifying the visitors to know the level of their interest and satisfaction by using the IPA method. The results of IPA analysis were used as reference for making strategic alternatives. The next stage was identifying the problems to be researched, namely identifying internal and external environment of the company. The results of the internal environment analysis were presented in IFE matrix, while the results of the external environment analysis were presented in EFE matrix. Both IFE and EFE matrixes were matched to get some strategic alternatives of marketing using IE matrix to know the recent position of the company. The IE matrix became one of the foundations for determining the strategies in the SWOT matrix. The marketing strategic priorities suitable for the company were determined using AHP. The frame of thought of the research is presented in Figure 1.
_______________________ WORLD TECHNOLOGIES _______________________
92
ENTREPRENEURSHIP MANAGEMENT
Demand for increasing the number of visitors in facing competition and making Botanic Garden a potential agrotourism area in East Java Consumers’ perception on IPA method (Importance Performance Analysis)
Marketing analysis
External environment: Economy; Socio-culture, emography and environment; Government policy; Technology; Similar industry competition
Internal environment: Marketing management; Finance; Facilities and Services; HRD
Internal Environment Analysis
External Environment Analysis
IFE Matrix
EFE Matrix
IE Matrix SWOT Matrix Strategic Alternatives Analytical Hierarchy Process (AHP) Marketing Strategic Priorities suitable for Sukorambi Botanic Garden Agrotourism
Figure 1. Research framework
RESULTS Agrotourism Potential in Jember Regency Jember Regency astronomically is situated in 6º27'29" until 7º14'35" East Longitude and 7º59'6" until 8º33'56" South Longitude with an area of 3.293,34 Km2. It has ±76 islands, the largest of which is Nusa Barong Island. Based on its geographical position, Jember Regency has the following borders: • to the north : Bondowoso and Probolinggo Regency • to the south : Indian Ocean • to the east : Banyuwangi Regency • to the west : Lumajang Regency The use of land in Jember Regency is dominated by cultural activities. The land cultivated for agriculture is 46,41% of the total area, while the rest is used for settlement (9,93%), forest (21,17%) and others (22,49%).
Jember Regency is located at the altitude of 0–3.330 m above the sea level. An area of 100–500 m height above the sea level is the widest, i.e. 1.240,77 km² or 37,68 % of the total area of Jember Regency, whereas the narrowest is the area of more than 2.000 m above the sea level, with an area of 31,34 km² or 0,95 % of the total area of Jember Regency. Jember Regency has a topographical characteristic of fertile canyon plains in the middle and the south, and it is surrounded by mountain range from the west and east borders. In the south-west area there is a plateau of 0–25 m above the sea level, while in the north-east bordering with Bondowoso Regency and in the south-east bordering with Banyuwangi Regency the altitude is more than 1.000 m above the sea level. In view of the number of population, based on the statistical data from 2013, the number of population in Jember Regency was 2.529.967 persons, and its density was 787,47 persons/km (JDA, BPS 2013), and most of them are of young age group. Looking at the
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY
demographical condition, it shows that Jember Regency has potential human resources as a supplier and bidder of manpower in the field of tourism industry. Jember has a potential of ecotourism, agrotourism, and cultural tourism that can become a reliable and specific icon to be sold outside the area. From the west-end to the east-end there is a variety of plantation with various commodities. The good geographical and topographical condition of Jember Regency makes it a well-growing agrotourism. Agrotourism areas in Jember Regency are as follows: 1. Gambir Mountain Agrotourism 2. Glantangan Agrotourism 3. Gumitir Mountain Agrotourism 4. Rembangan Agrotourism 5. Pasang Mountain Agrrotourism 6. Jampit Kalisat Coffee Plantation Agrotourism 7. Jember Tobacco Agrotourism 8. Coffee and Cocoa Agrotourism IPA Analysis According to Wijaya (2011) Importance-Performance analysis (IPA) is a procedure to show the relative importance of various attributes on the company’s performance. This analysis was also used in the research carried out by Wardhani (2006) and Puspitarini, Suliantoro, Kusumawardhani (2010). IPA combined the measurement of satisfactory dimension and interest dimension into two girds. Then the combination was plotted inside. The interest value is represented by a vertical line and the satisfactory value by a horizontal
93
line, using the average value in the interest dimension and satisfactory dimension as the center of their cutting line (pusat pemotongan garis). Based on the various perceptions on the visitors’ interest level, the most dominant interest level was formulated. This analysis method was carried out by distributing questionnaires to visitors (convenience sampling). The research carried out by Yola and Budianto (2013) also distributed questionnaires to supermarket visitors to find out the level of interest and satisfaction of the supermarket visitors. Primary data were obtained through literary study, internet and journals that supported the research. The analyzed results of each attribute of Sukorambi Botanic Garden using quadrant analysis can be seen in Figure 2 and its explanation in Table 1. The IPA analyzed results described in Kartesius diagram include the following: Quadrant A. Attributes belonging to quadrant A are fruit crops I and information service 11. The interest value level is above the average while the satisfactory value level is below the average. This shows that the Sukorambi Botanic Garden visitors’ expectation on the implementation of attribute 1 and 11 is high, while the consumers’ satisfactory level on attribute 1 and 11 is still low. In this area the Sukorambi Botanic Garden management must carry out improvement continuously so that their performance will keep increasing. One aspect that needs to be done for improvement and adaptation is adding fruit crops because they are still not plenty and varied.
Quadrant A
Quadrant B
Interest
Quadrant D
Quadrant C
Satisfaction Gambar 2. Cartesius diagram of customer satisfaction towards Sukorambi Botanic Garden attributes
_______________________ WORLD TECHNOLOGIES _______________________
94
ENTREPRENEURSHIP MANAGEMENT
Quadrant B. Attributes belonging to quadrant B are attributes 4, 5, 6, 7, 10, 14, 15, and 16. The satisfactory level value of all the attributes mentioned above is above the average and so is the interest level of the visitors. This shows that implementation of all the attributes’ performance is in accordance with the expectation (interest level). Therefore, the attributes in this area must be maintained continuously because they are the most superior according to visitors. Quadrant C. Attributes belonging to quadrant C are attributes 2, 3, 9, and 12. The visitors’ satisfactory value level is below the average, and their interest value level is also below the average. These attributes are considered not to give any significant impacts on the Sukorambi Botanic Garden. For the attributes in this area the improvement on each attribute needs to be reconsidered because their influence on the visitors’ benefits is very small. Quadrant D. Attributes belonging to quadrant D are attributes 8 and 13. The visitors’ satisfactory value level is above the average while the visitors’ interest value level is below the average. This shows that the visitors’ satisfactory level on all attributes’ implementation exceeds the visitors’ expectation. These attributes are not the main objective of improvement, and they are even the ones that need to be reduced.
Analysis of the internal environment Analysis of the internal environment in this research was aimed at evaluating the internal strength and weaknesses that significantly influenced the strategy of marketing development of Sukorambi Botanic Garden agrotourism. This analysis was also used by several other researchers, among others, Azhari, Yantu, Asih (2013), and Afrillita (2013). The internal condition faced by Sukorambi Botanic Garden can be seen from the weighted scores in the IFE matrix. The IFE total weighted score (2,538) indicates that Sukorambi Botanic Garden is in an average position, which means that the company’s internal position is moderate. The total weighted score for the strength factor is 1,954 and the weakness factor is 0,584. This shows that Sukorambi Botanic Garden has a greater strength factor than a weakness factor. Based on the calculation in IFE matrix a complete tourism concept completed with outbound facilities can be obtained. This is a major strength factor weighting 0,085 and average rate of 4 and the score obtained is 0,342. The major weakness factor of Sukorambi Botanic Garden is the fund used comes from a private source (not a bank loan) weighting 0,102 and average rate of 1 and the most important factor having an average score of 0,102. The results of IFE matrix analysis is summarized in Table 2.
Table 1. Results of attributes belonging to visitors’ satisfactory quadrant of Sukorambi Botanic Garden Quadrant A B
C
D
Number of attribute 1 11 4 5 6 7 10 14 15 16 2 3 9 12 8 13
Attribute Fruit plant samples Information service Adding types of crops Variety of crops Layout of building and design of Botanic Garden location Business concept offered (outbond, horse-riding, restaurant, fruit crops, fruit sale outlet, library) Hospitality and employee service Cleanliness of location Easiness to reach location Convenience of location Fruit products sold Playing facilities Promotion effort Number of employees Entry ticket price Supporting facilities (praying place, toilet, etc.)
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY
95
Table 2. IFE matrix of Sukorambi Botanic Garden Internal strategic factors STRENGTH Clear division of and high motivation conferment to employees Tourism concept completed with outbound facilities Available supporting facilities Landscape condition Services provided Entry ticket price Strategic location and cozy nature Total WEAKNESSES Minimum promotion and visitor management Private fund (no bank loan) Simple management information and financial record Increase of production cost Limited employees’ educational level Total Total IFE
Analysis of External Environment The external condition faced by Sukorambi Botanic Garden can be seen from the total weighted score in the EFE matrix. The EFE total weighted score obtained is 3,075, indicating that Sukorambi Botanic Garden’s effort to carry out strategies and utilize opportunities and avoid threat is above the average. The total weighted score for the external factor to become opportunities is 2,788 while the threat factor is 0,287. The result of calculation shows that Sukorambi Botanic Garden is able to respond to opportunity well and able to handle threats. The EFE matrix results can be seen in Table 3. Results of EFE matrix show that the natural tourism trend factor (agriculture) and group tourism trend factor are the biggest major opportunity for Sukorambi Botanic Garden with its weighted score 0,374. The factor becomes an opportunity that has the highest interest level because it weighs 0,095 and the company’s response to this factor is very high, score 4. The threat factor that becomes a major threat is competition of similar industries with its weighted score of 0,072. This factor is considered the most important because it weighs 0,072 and the company’s response is also high, the rate of 1.
Weight
Rating
Score
0,082 0,085 0,084 0,085 0,083 0,077 0,073
3 4 4 3 3 4 3
0,245 0,342 0,337 0,256 0,249 0,307 0,218 1,954
0,078 0,102 0,075 0,093 0,083 1,000
2 1 2 1 1
0,156 0,102 0,151 0,093 0,083 0,584 2,538
Position of Sukorambi Botanic Garden Agrotourism Development Based on the results of IFE and EFE matrix, it is found that the IFE score is 2,579 and the total EFE score is 3,075, which puts Sukorambi Botanic Garden in the second cell, namely growth and build. The intensive strategies that can be carried out by the company are market penetration, market development and product development. IE matrix can be seen in Figure 3. SWOT Matrix According to David (2012) SWOT matrix is a matching tool that is used to help managers to develop four kinds of strategy. This analysis method is also used in the research carried out by Payeras, Jacob, Garcia, Alemany, Alcover, and Ribes (2011). The strategies are SO strategy (strength-opportunity), WO strategy (weakness-opportunity), ST strategy (strength-threat), and WT strategy (weakness-threat). The SWOT matrix of Sukorambi Botanic Garden is presented in Figure 4.
_______________________ WORLD TECHNOLOGIES _______________________
96
ENTREPRENEURSHIP MANAGEMENT
Table 3 EFE matrix of Sukorambi Botanic Garden External strategic factors OPPORTUNITIES Trend of natural tourism (agriculture) and trend of group tourism Trend of outbound tourism for students and employees Increase of population number in Jember Regency Government’s support to regional tourism development Mass leave stipulation Rapid technological development in the community Good Stakeholders People’s ability to do family recreation Availability of transportation means needed by community to reach recreation places Total THREATS Competition of similar industries Visitors have power on the company Natural condition (unpredictable weather) Total Total EFE
Strong 3,0–4,0 High 3,0–4,0 EFE total weighted value
Moderate 2,0–2,99 Low 1,0–1,99
IFE Total Value weighted Average 2,0–2,99
Weight
Rating
Score
0,095 0,088 0,087 0,083 0,088 0,091 0,090 0,073 0,091
4 4 3 4 3 3 4 4 3
0,374 0,354 0,262 0,334 0,265 0,273 0,359 0,293 0,273 2,788
0,072
1
0,072
0,068 0,073 1,000
1 2
0,068 0,147 0,287 3,075
Weak 1,0 –1,99
I
II
III
IV
V
VI
VII
VII
IX
Figure 3. IE matrix Sukorambi Botanic Garden’s AHP Analysis The analytical hierarchy process handles a problem in the frame of thought in an organized way so that it can be expressed to make an effective decision over the problem. This analysis is also used in the research carried out by Upadani IW, Darmawan DP, Tenaya IM (2013), and Pattiapon (2011). The experts’ evaluation is carried out to see the importance level of each element in the matrix over each element’s comparison as described by Saaty (1993). The SWOT matrix analysis results in nine strategic alternatives that can be carried out by Sukorambi Botanic Garden. The choice of strategic priorities that is considered the most suitable is the
Analytical Hierarchy process (AHP) whose results can be seen in Table 4. The results of AHP analysis shows that the strategy to maximize the concept of recreation while studying (crop cultivation and animal farming) is the major priority strategy weighing 0.148. This strategy is the one that is designed to utilize the company’s internal strength to get benefits from the external strength. Sukorambi Botanic Garden should carry out development in the concept of recreation while studying, for example adding the number the existing plant variety, from decoration plants, fruit crops, medicinal crops, forest crops, or extinct crops.
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY
IFE
EFE
(STRENGTHS - S) 1. Clear division of and high motivation conferment to employees 2. Tourism concept completed with outbound facilities 3. Available supporting facilities 4. Landscape 5. Services provided 6. Entry ticket price 7. Strategic location and cozy nature STRATEGY S –O 1. Increase number of outbound facilities (S2, S3, S4 Vs O2, O7, O8) 2. Maximize recreation concept of recreation while studying (crop cultivation and animal farming) (S3, S4, S5 Vs O1, O8) 3. Optimize online promotion activities (S8 Vs O6) 4. Coordinate intensively with stakeholders for improvement and sustainable development (S3, S4 Vs O3, O4, O5, O7) 5. Facilitate transportation access (S1, S3, S4, S6, S7 Vs O4, O7)
(OPPORTUNITIES – O) 1. Trend of natural tourism (agriculture) and trend of group tourism 2. Trend of outbound tourism for students and employees 3. Increase of population number in Jember Regency 4. Government’s support to regional tourism development 5. Mass leave stipulation 6. Rapid technological development in the community 7. Good Stakeholders 8. People’s ability to do family recreation 9. Availability of transportation means needed by community to reach recreation places (THREATS – T) STRATEGY S – T 1. Competition in similar industries 1. Realize facility development on 2. Visitors have power over the the remaining land by fixing the company existing facilities (S1, S2, S3, S4, S5, S7, S8 Vs T1, T2, T3) 3. Natural condition (unpredictable weather)
97
(WEAKNESS - W) 1. Minimum promotion and visitor management 2. Private fund (no bank loan) 3. Simple Information management and financial record 4. Increase of production cost 5. Limited employees’ educational level
STRATEGY W – O 1. Optimize promotion activities (W1 Vs O1, O2, O3, O5, O6, O8, O9) 2. Ask for a loan from financial institution to increase capital (W2, W4, Vs O4, O7)
STRATEGY W – T 1. Improve service quality through employee training and improve the company’s management system (W1, W2, W3, W4, W5 Vs T1, T3)
Figure 4. SWOT Matrix of Sukorambi Botanic Garden Table 4. Results of AHP in Sukorambi Botanic Garden Priority 1 2 3 4 5 6 7 8 9
Alternative strategies Maximize the concept of recreation while studying (crop cultivation and animal farming) Increase the number of outbound games Coordinate intensively with stakeholders for improvement and sustainable development Ask for a loan from financial institution to increase capital Optimize promotion activities Facilitate transportation access Improve service quality through employee training and improve the company’s management system Realize facility development in the remaining land by fixing the existing facilities Optimize online promotion activities
Score 0,148 0,141 0,137 0,128 0,124 0,124 0,092 0,057 0,050
_______________________ WORLD TECHNOLOGIES _______________________
98
Managerial Implications Based on the results of AHP and IPA analyses, we can get a strategic recommendation that can be implemented by Sukorambi Botanic Garden management. There are three managerial implications produced in this research, namely: 1. Entertainment The strategies related to entertaiment are as follows: a. Add the number of outbound facilities b. Maximize the concept of recreation while studying (crop cultivation and animal farming) c. Increase information services d. Realize facility development in the remaining land by fixing the existing facilities.
2. Managerial The strategies related to managerial are as follows: a. Optimize online and non-online promotion activities b. Facilitate transportation access c. Improve service quality through employee training and improve the company’s management system 3. Expansion The strategies related to expansion are as follows: a. Coordinate intensively with stakeholders for improvement and sustainable development b. Ask for a loan from the financial institution to increase capital
CONCLUSION AND RECOMMENDATION Conclusion Based on the objectives of this research it can be concluded that: The potential of agrotourism in Jember Regency is very high, if it is seen from the geographical location and its topographic characteristic of fertile plateau in the middle and the south and it is surrounded by mountains ranging from the west border to east border. Because of its strategic location, there are many kinds of agrotourism that can be developed in Jember Regency. Analysis on the company’s marketing environment which consists of internal and external environment produces strength, weakness, opportunity, and threat.
ENTREPRENEURSHIP MANAGEMENT
The strategic factor that becomes the main strength and is relatively high is the concept of recreation completed with outbound. The main weakness strategic factor that is relatively high is the use of private fund (no bank loan). The main opportunity strategic factor is the trend of natural tourism trend (agriculture) and group tourism trend. The main threat strategic factor that is relatively high is competition of similar industries. The strategy that becomes the main priority produced from AHP analysis is the strategy to maximize the concept of recreation while studying. Sukorambi Botanic Garden should carry out development of the concept of recreation while studying, for example adding the number of the existing crop varieties, from decoration plants, fruit crops, medicinal plants, forest plants, or extinct plants. Recommendations Some recommendations that can be proposed to the management of Sukorambi Botanic Garden to improve the performance of the company so that it can satisfy the visitors’ needs are as follows: 1) Sukorambi Botanic Garden needs to improve its service quality and get along well with visitors, increase cooperation with the present stakeholders, and increase promotion activities. 2) Sukorambi Botanic Garden is advised to conduct survey of importance level and customers’ satisfaction periodically in order to increase the visitors’ satisfaction. To improve the visitors’ satisfaction survey, it is better to add factors measured so that they can enrich the survey results. 3) Further research to implement strategic alternatives that have been recommended is very much needed for the company’s development.
References Afrillita N. 2013. Analisis SWOT dalam menentukan strategi pemasaran sepeda motor pada PT. Samekarindo Indah di Samarinda. E-journal Administrasi Bisnis 1(1):56–70 Azhari MH, Yantu MR, Asih DN. 2013. Pengembangan strategi pemasaran produk gula tapo (studi kasus di Desa Ambesia Kecamatan Tomini Kabupaten Parigi Moutong). E-Journal Agrotekbis 1(1):81– 92. BPS Kabupaten Jember. 2012. Kabupaten Jember Dalam Angka 2013-Jember In Fingures. Jember: BPS.
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING STRATEGIES FOR DEVELOPING AGROTOURISM IN JEMBER REGENCY
David FR. 2012. Manajemen Strategis: Konsep. Jakarta: Salemba Empat [Deptan] Departemen Pertanian. 2005. Agrowisata meningkatkan pendapatan petani. http:// database.deptan.go.id/agrowisata [20 Oktober 2013]. Pattiapon ML. 2011. Perancangan strategi pemasaran produk sepeda motor Honda dengan menggunakan metode SWOT dan QFD. ARIKA 5(1): 61–70. Payeras M, Jacob M, Garcia MA, Alemany M, alcover A, Ribes LM. 2011. The yanthing charter tourism AWOT: A basical analysis to design marketing strategis. Tourismos : An International Multidiciplinary Journal of Tourism 6(3): 111– 134. Prathivi MN. 2012. Strategi penganekaragaman konsumsi pangan menuju pola pangan harapan tahun 2015 di kota Jambi [tesis]. Bogor: Institut Pertanian Bogor Puspitarini NB, Suliantoro H, Kusumawardhani L. 2010. Analisis kualitas pelayanan dengan menggunakan integrasi Importance Performance Analysis (IPA) dan model Kano (studi kasus di PT. Perusahaan Air minum Lyonnaise Jaya Jakarta). Jurnal J@ti Undip 5(3):185–198. Rinawati R. 2014. Strategi pengembangan agrowisata perkebunan gunung mas PTPN VIII (studi kasus di unit usaha Perkebunan Gunung Mas PTPN
99
VIII, Kecamatan Cisarua, Kabupaten Bogor, Provinsi Jawa Barat). Jurnal Agric Sco. 1(4):1827 Saaty TL. 1993. Pengambilan Keputusan Bagi Para pemimpin: Proses Hierarki Analitik untuk Pengambilan Keputusan dalam Situasi yang Kompleks. Jakarta: PT. Binaman Pressindo. Sabrina A. 2013. Strategi pemasaran durian pada usaha agrowisata “Warso Farm” di Desa Cihideung, Kecamatan Cijeruk, Kabupaten Bogor, Provinsi Jawa Barat [tesis]. Bengkulu: Universitas Bengkulu. Upadani IW, Darmawan DP, Tenaya IM. 2013. Strategi pengembangan agribisnis Puring di Desa Petiga, Kecamatan Marga, Kabupaten Tabanan. Jurnal Manajemen Agribisnis 1(2): 67–75. Wardhani. 2006. Pengukuran tingkat kepuasan konsumen jasa penerbangan (studi kasus pada jasa penerbangan Garuda indonesia Semarang – Jakarta). Jurnal Studi Manjemen & Organisasi. 3(1):40–64 Wijaya T. 2011. Manajemen Kualitas Jasa. Jakarta: Indeks. Yola M, Budianto D. 2013. Analisis kepuasan konsumen terhadap kualitas pelayanan dan harga produk pada supermarket dengan menggunakan metode Importance Performance Analysis (IPA).Jurnal Optimasi Sistem Industri 12 (12):301–309
_______________________ WORLD TECHNOLOGIES _______________________
11
MARKETING MIX ANALYSIS OF NATURAL TOURISM AREA 'KAWAH PUTIH’ AND ITS EFFECT ON VISITORS’ DECISION Isyana Rahayu*)1, Dodik Ridho Nurrochmat**), and Achmad Fachrodji***) Graduate Program of Management and Business - Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Mercu Buana University Jl. Menteng Raya No.29 Jakarta Pusat *)
ABSTRACT Kawah Putih is one of the leading tourist places in Bandung which has significantly contributed to the revenue of travel business division in the Forestry Housing as the manager. The revenue obtained depends on the marketing mix strategy conducted by the management because the marketing mix is the elements which become a consideration basis when making marketing communication strategy services in order to understand the demands of tourists. Therefore, the objectives of this study were to obtain and understand information and analyze the visitors’ responses on the natural tourism area related to the marketing mix that has been implemented by the management. The dependent variables included the elements of marketing mix, that involves 7P – product, price, place, promotion, people, procees and physical evidence, while the independent variable included the visitors’ decision. From the validity and tests, it is revealed that the overall regression model bring effects or at least there is one variable of the marketing mix factors that influences the decision of the visitors. From the data analysis, it is found that the process variables and physical appearance do not significantly affect the decision of the visitors. The other variables. that involve variables of product, price, place, promotion, and human have significantly influence the visitors’ decision. Keywords: Marketing mix, Kawah Putih, decision of visitors, tourists
ABSTRAK Kawah Putih merupakan salah satu wisata unggulan Kota Bandung dan telah berkontribusi cukup signifikan untuk pendapatan divisi bisnis wisata Perum Perhutani. Pendapatan yang diperoleh tergantung dari strategi bauran pemasaran yang dilakukan oleh pengelola karena pada bauran pemasaran terdapat unsur atau elemen yang menjadi dasar pertimbangan pembuatan strategi komunikasi pemasaran jasa dalam rangka untuk memahami tuntutan dari wisatawan. Tujuan penelitian ini adalah memperoleh informasi, memahami dan menganalisis tanggapan pengunjung kawasan wisata alam tentang bauran pemasaran yang telah dilakukan oleh pihak pengelola. Variabel independennya adalah elemen bauran pemasaran 7P yaitu product, price, place, promotion, people, procees dan physical evidence, sedangkan untuk variabel dependennya adalah keputusan pengunjung. Pada uji validitas dan reabilitas diketahui data hasil penelitian bisa digunakan. Pada uji asumsi didapatkan bahwa data memenuhi asumsi normal serta tidak terdapat multikolinearitas dan heteroskedasititas Dari hasil analisis data dapat diketahui variabel proses dan penampilan fisik tidak berpengaruh terhadap keputusan pengunjung. Sedangkan untuk variabel lainnya yang mencakup variabel produk, harga, tempat, promosi, dan manusia signifikan berpengaruh terhadap respon keputusan pengunjung. Kata kunci: marketing mix, Kawah Putih, keputusan pengunjung, wisatawan
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX ANALYSIS OF NATURAL TOURISM AREA 'KAWAH PUTIH’ AND ITS EFFECT...
INTRODUCTION WTO states that for the last decade there has been a significant shift in tourist destination maps in the world and region. This change can be seen from the number of tourists to various country, for example, to Indonesia (Martaleni, 2011). Perum Perhutani or Forestry Housing as the StateOwned Enterprises (SOEs) in the field of forestry has attempted to develop the service sector of nature (nature-based tourism) in their area i.e. Java Island, particularly for natural tourism in Bandung, West Java. This is one of the efforts attempted by Forestry Housing in order to alter the orientation of its future business which was initially timber product changing into forest resources. The revenue of Travel Business Division to the macro total revenue in Unit West Java and Banten is sufficiently helpful to the income of Perum Perhutani in Unit III, and the natural Kawah Putih itself has sufficiently contributed to the revenue of Tourism Business Division as well. The number of visitors and revenues continually increases every year, and it affects the revenue (Joehastanti, 2012). The varieties of natural tourisms like forests, mountains, beaches and artificial parks consisting of garden tour, zoo, natural tourism attraction and history attraction (Kesrul, 2003) can become one of the country economic bases and absorb labor so that the human and natural resources can be utilized optimally. Muhajirin and Iwan (2010) state that ecotourism does not exploit the land but just utilizes the nature service and community to meet the need of physics and psychology knowledge. In the study case of the visitors’ characteristics, there is one thing that is indispensable for the development of Kawah Putih nature tourism. According to Forestry Housing management, strategy and marketing process conducted by the tour manager of Kawah Putih are not fully developed yet. Sometimes, there are still some tourists filing complaints related to both travelling access and convenience which definitely reduce the comfort and satisfaction of the visitors; therefore, identification is required in order to determine whether in this era, the interest of going back to nature tourism has affected the ecotourism that has a big opportunity to be developed. (Atmoko, 2010). In this time, ecotourism is not defined as a tourism concept, but people see it as an action of marketing tools and of increasing the revenue (Postica, 2014).
101
Forestry Housing office can understand the demands/ desires of tourists who visit the natural tourist area, Kawah Putih. Such identification will evaluate the service performance of marketing mix that has been implemented by the management/tour manager. If performance is considered to be a good marketing mix, it will affect the visitors’ decision to come back. Marketing mix performance is a part of marketing mix strategy results implemented by the management based on the responses of consumers in order to optimize the contribution of working results in regards to product/ service, price, place, promotion, people, physical evidence, and process (Kotler, 2006). Kotler (2006) defines the marketing mix as a mix of marketing variables that can be controlled and used by a company for pursuing the expected sales in target markets. Booms and Bitner in Tjiptono, Chandra (2012) group the elements of the marketing mix into 7P, in which 3P is added by 4P, including product, price, place, promotion, people, process, and physical evidence. The products in the service marketing are the whole concept of the object or process that provides a value to the consumer (Lupiyoadi and Hamdani, 2006). In service products, the consumers will not only buy physical products but also obtain the benefits from these products called "the offer". The products mentioned in the discussion of service include the total products consisting of core products, expected products, auxiliary or augmented products and potential products. Lovelock (2002) distinguishes the product/service marketing into seven things, consisting of nature of the product, greater involvement of customer, people as part of the product, eater difficults in maintaining quality control standard, absence of inventories, importance of time factor dan different distribution channel. According to Muhmin (2002), the price is not just a nominal form as it tends to be directed at the elements of marketing programs such as the product‘s selling prices, discounts, rebates and payment systems which are applied to the customers of the product. The selling prices of the products in this case include the sale price of admission, price of food/drinks, souvenirs as well as vehicle parking fee. According to Hurriyati (2005), for the manufacture of industrial products, place is defined as a distribution channel (zero-channel, two-channels, and multi-level channels), while for the service industry products, the place is defined as a place where service is provided.
_______________________ WORLD TECHNOLOGIES _______________________
102
One of the 7P in marketing mix is promotion. It is important to create descriptive and persuasive communication to the consumers. The company can provide descriptive and persuasive information on the products directly or through professional parties. Blattberg and Nesling in Kotler (2011) defined that promotion consists of a diverse collection of various intensive tips, mostly short-term, designed to encourage specificifally faster or larger purchase of a product/ service by the consumers. Ontensive services tips of marketing will be successful if it is appropriately and continuously implemented. George dan Berry in Hendarto (2003) had identified a view guideliness in service promotions used to explain the promotion in ecotourism, and they consist of intangible ecotourism services, dissunderstanding ecotpurism services, romises that have to be done by the management, word of mouth promotion, and also motivation of an employee. Many companies promote their products by using the advertising media. Advertising is a promotion program to convey an information effectivelly and effisiently regarding the product to (Taufik, 2013). The success of a marketing service is highly dependent on the selection, training, motivation and human resource management. People are the main asset in the service industry, and offender services act as the service providers, that influence the consumers to use their services. The important factors for people include knowledge, attitude, and motivation of employees in the service industry. The moment of truth will occur at the time of contact between the employees and customers. Lupiyoadi (2006) defined process as a combination of all the activities, which generally consist of procedures, work schedules, mechanisms, activities, and routine matters where the service is produced and delivered to the consumer. The process of delivering services to the consumers can affect the quality of services because the services are completed the company's own employees, so in order to ensure the quality of service (quality assurance), the entire company's operations must be executed in accordance with the standardized systems and procedures by the employees who are competent, committed, and loyal to the company. The process includes procedures, tasks, schedules, mechanisms, activities and routines in which a product or service is delivered to the customers.
ENTREPRENEURSHIP MANAGEMENT
Physical evidence is the physical environment in which there is a collaboration between service companies and consumers, and it also means any real components that exist in the physical environment that facilitates the existence or communication services. The physical appearance generally affects the consumer‘s decisions to buy and use the product and services on offer. The elements included in the physical environment are the buildings, facilities and infrastructure, logos, colors and other complementary service items such as ticket, cover, label, and so forth. In consumer behavior theory, satisfaction is defined from the perspective of consumers‘ experiences after consuming some products or services (Palilati, 2001). Consumer perceptions are shaped by learning process and process of thought in purchasing the product/ service. If consumers have been influenced by a perception, their interest in buying the products/services will generally be strong so that they will be motivated to fulfill the basic needs of their interests. This is where the consumers make their decision to buy the products/services of their interests. Some factors that determine the consumers‘ purchasing decisions consist of environmental influences, individual differences and the process of consumer psychology (Engel et al. 1994). According to Putri (2012), purchasing decisions are determined by three main points including information, process information and some factors that determine the decision process. Deciding some buying researched, consumers usually know what products they will buy, where they buy them and what the price of the product is (Lita, 2010). Sciffman and Kanuk in Loekito et al., state a decision is choosing an action from one or more consumer perception alternatives built by studying the buying process. By understanding the consumer behavior, the company can hold the targets in a more focused and clearer way (Getrycia and Djatikusuma, 2014). This research was conducted to examine the performance of the marketing mix of Forestry Housing Office in the natural tourist resot, Kawah Putih, specifically in terms of tourist responses. The research also aimed to determine the influences of marketing mix on the visitors‘ decisions.
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX ANALYSIS OF NATURAL TOURISM AREA 'KAWAH PUTIH’ AND ITS EFFECT...
METHODS The research variable is a concept or a constract which varies the value (Sumarwan 2014). This study used seven variables influencing product (X1), price (X2), location (X3), promotion (X4), human (X5), process (X6) and physical appearance (X7), while the decision was a variable that affected visitor (Y). Sampling technique used was incidental non-probability sampling. By using 106 samples generated through the techniques of Tabachnik and Fissel in which the technique requires that the amount of data used must be greater than the sum of all variables used in the model. To anticipate the occurrence of missing data or data extremes (outliner), coded number of samples was arranged for 20% of the total sample. In addition to observations, the researcher also gathered information through questionnaires distributed to the visitors. The questionnaire used in this study used Likert scale. The measure was set for the respondents with questions and they were asked to give an answer of “completely agree”, “agree”, “neutral”, “disagree”, dan “completely disagree”(Wangsa et al. 2012) The data used in this study were primary data derived from the questionnaire. Because of that, before drawing a hypothesis, a set of tests was required to know the validity and reliability of indicators or questions in the questionnaire. These tests were performed by using SPSS 17.0. The significance values were used to determine the validity of the item. If the significance value was <0,05, the item was considered to be valid. In contrast, if the value of the significance was of> 0,05, the item was invalid. For the regularity, the Cronbach alpha used a minimum limit of 0,6 for identification of sufficient reliability. Test of assumptions included normality test, multicollinearity and heteroscedasticity test. In this study, test for normality used KolmogorovSmirnov test. Judging from the probability numbers, if the probability is > 0,05, it is clear that the residuals are normally distributed. Conversely, if the probability is <0,05, it is not normally distributed. Multicollinearity detection can be obtained by looking at the value of tolerance and the value of Variance Inflation Factor (VIF). The variable has caused multicollinearity because the value of tolerance is <0,1 or VIF> 10 while heteroscedasticity test in this study was conducted through scatterplot method, i.e. by observing the pattern of the dots. If the points on the
103
scatter plot spread above and below number 0 on the Y axis and it does not form a specific pattern, it shows that there is no heteroskedastisitas trouble. Regression analysis is a study on the relationship between one explained variable and one or two explanatory variables (Gujarati, 2006). To measure and determine the cause- effect relation (causal) between the variables and variables-other variables, the hypothesis testing should be conducted by using regression analysis (t test and F). In the tests of t and F, the value of significance probability (Sig.) compared with the limit of significance was set to be equal to 0,05. If the significance probability value is <0,05, it indicates partial influence of independent variables on the dependent variable.
RESULTS Profie of Respondents In this study, there were no significant differences in terms of gender of visitors (51,5% of males, 48,5% of female). It was identified that the natural attraction of Kawah Putih has preferred characteristics and has been desired by both male and female visitors. Yet, there is a prominent habit of the customers’ visit that is a visit in groups. If seen from its economic class, the natural attraction in the area of the Forestry Housing Office is visited by a large number of visitors and even by those coming from the upper-middle economic class (monthly income of> Rp1.000.000). Most visitors are employees with the latest education of high school and college graduates. The respondents who came were also divided into local and foreign tourists. With the presence of foreign tourists, it indicates that tourist attraction Kawah Putih is reasonably well known and considered to be a-must-visit place by the foreign tourists. Most respondents generally were in their firsttime visit. Still, there were also respondents who had more than three times of visits to this Kawah Putih. This situation suggests that the expectation to perform repeated visits already exists but has not been seen in practice. The tourists usually visit natural attraction, Kawah Putih, for holiday. Generally, the respondents knew about the nature of this Kawah Putih from their friends, relatives and family. This is a very good thing for the tourism because the power of mouth is assumed to be the highest stage of the campaign objectives to achieve.
_______________________ WORLD TECHNOLOGIES _______________________
104
ENTREPRENEURSHIP MANAGEMENT
Validity and Reliability Tests
Statistics Hypothesis Testing
With a sample size of 130, the degree of being independent was 128 so the r table was of 0,172. It can be seen from tables 55 to 61 that the value of r was calculated by using bivariate Pearson on each sub-variable. The result was greater than 0,172 and so the sub-variables in the questionnaire were valid. The value of Cronbach's alpha for all variables in forms of product, price, place, promotion, people, process, physical appearance and responses visitors was 0,553. Therefore, the value of Cronbach's Alpha (r = 0,553) was greater than the r table (0,172), making it clear that the data were reliable and can be used as the data research.
In the Anova Table, the value of sig equal to = 0,000 less than 5% from alpha rejected the H0, indicating that the overall regression models are influential or at least one variable of the marketing mix factor influences the decision of visitors.
Test of Assumptions From the data processing, it is known the value of Kolmogorov-Smirnov test for normality test was greater than alpha. Therefore, the data were considered to fulfil the normal assumption because the sig. was 5%greater than the alpha. VIF value for all variables was smaller than 10, meaning that there is no multicollinearity in regression analysis that fits the assumptions of multiple regression analysis. If we look at Figure 1, the alleged value of the residual visible point on the axis spreads evenly and does not form a specific pattern. It is clear that there is no heteroskedasitas.
In Table 1, it is visible the sig value of each variable. Process variables and physical appearance have a sig value 5% below alpha, which respectively are 0,001 and 0,000. the T-test for these two variables rejects H0, which means the process and the physical appearance significantly affect the decision of the visitors. As for the other variables that have a sig value greater than 5% so that the variables of alpha product, price, place, promotion, and humans do not significantly affect the response of visitors decision. Based on Table 1 also it is possible to a multiple regression equation as follows: Y = -6,033 + 0,423X1 + 0,404X2 – 0,588X3 + 0,941X4 + 0,269X5 + 0,126X6 - 0,108X7 Note: X = Visitor’sdecisions X1 = product X2 = price X3 = place X4 = promotion X5 = people X6 = procees X7 = physical evidence
Figure 1. Scatterplot
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX ANALYSIS OF NATURAL TOURISM AREA 'KAWAH PUTIH’ AND ITS EFFECT...
Tabel 1. Tabel Uji-t Model Constant) Product Price Place Promotion People Proceess Physical Evidence
Unstandardized Coefficients B -6,033 0,423 0,404 0,588 0,941 0,269 0,126 -0,108
Sig. 0,170 0,020 0,000 0,002 0,001 0,020 0,330 0,613
The Influence of Product on the Visitors’ Decision The test results showed that the products offered by the panoramic beauty and uniqueness, as well as the attractions of existing facilities in the natural tourist sites Kawah Putih significantly influenced the visitors’ decision. The visitors feel that the products offered must be suitable with their expectations, so improvement and innovation to attract them to come back to natural tourist site, Kawah Putih are required. There are many variations of customer motivation, and this distinguishes between the aim of tourism and the right package offered to the customers (Karta dan Suarthana, 2014). Variable product itself is, in fact, a representation of tourism quality offered by the manager, a given product or result of God's creation that is unique and has a high artistic value as a natural attraction. Therefore, the manager no longer needs to revitalize the region's overall tourism. For this reason, the panorama still becomes the main products offered by the manager, and it seems that dependence of visitors to the panorama of Kawah Putih remains high. The Influence of Price on the Visitors’ Decision Based on t-test results, it is known that the prices of entrance tickets, two-wheeler or four-wheel parking fees, prices of food/drinks and souvenirs offered at the natural tourist site, Kawah Putih, significantly influenced the visitors’ decision. This can be seen by sig to the variable price that is 0% or less which can be said 5% of the value of alpha. Basically a marketing strategy is controlled by the needs of tourism place purpose tourists (Riege dan Perry, 2000). The data processing on the visitors’ characteristics stated that most visitors were in the upper-middle level. In the long-term, the costumer loyalty can be used as the main
105
object in the strategic planning of marketing services. (Hidayat, 2009). The visitors expect competitive prices so that they become interested in coming to Kawah Putih tourist attraction because all the prices on the site are still not competitive for them. The Influence of Place on the Visitors’ Decision T-test results showed that the variable of location/place including costs of transportation, distance, easy access, road condition and driving directions to the location significantly influenced the visitors’ decision. From the results of the research on visitor characteristics, the obtained data showed that the visitors come not only from the local or domestic areas but also from abroad or foreign countries; therefore, changes or improvements will seemingly affect the decision of visitors on either coming back or not. The Influence of Promotion on the Visitors’ Decision Based on the t-test results, it is known that the promotion of natural tourism sites including Kawah Putih and intensity of promotional activities significantly influenced the decision of visitors. The manager of Kawah Putih has conducted reasonably good incentive promotions through the promotions of below and above the line, and this has been quite successful because most of the visitors obtain information on the sights/ from their friends, family, or relatives. To do some promotions, the management needs the knowledge on market which is used as reference to compile the strategies and promotion programs (Iyangjaya, 2013). This illustrates that a large number of tourists who have visited the natural tourist site of Kawah Putih were satisfied with their travelling experience so that they recommended this place to other people. Even so, the manager still has to make improvements to the intensity of promotions or add promotional activities, because it is believed to bring impacts on the visitors’ decision whether they want to revisit the tourist site. However, it was not enough, and for promoting the tourism, the management needs to interact with the local goverment in increasing and giving all information regarding the tourism to the local government or tourists (Bhuiyan et al. 2011). Cooperation between a tourist organization and the local goverment will bring more advantages and make the promotion areas wider (Buckley, 2004).
_______________________ WORLD TECHNOLOGIES _______________________
106
The Influence of People to the Visitors’ Decision Based on the test, the results indicated that the quality of human resource manager that includes knowledge of travel, hospitality and service are relatively significant to visitors. Most visitors come in groups, and the role of the officer manager in this case is very important to maintain communications and to provide information to the head of the group in order to avoid misunderstandings or dissatisfaction of the quality offered in the tourism. The condition showed that the role of HR was important when it is viewed from the visitors’ standpoint. The visitors assessed the human resource capacity in terms of knowledge, hospitality and services to be essential for them in order to create comfort and security for them. This explains why the variable of human significantly influenced the visitors’ decision. The Influence of Process to the Visitors’ Decision The results of data processed by using t-test showed that the variable of process that included travel procedures, information on sights, information center and follow-up complaints relatively had no significant influences on the decision of visitors. Process variable in this study was related to how the manager sent the information on sights and handled complaints submitted by the visitors. So far, the physical information which can be found at the site includes a tourist attraction, and it is believed that most visitors understand and are able to read the information in the location because the average of the visitors were high school and university graduates so they are considered to be capable to interpret visual information. This explains why the process variable did not significantly influence the decision of the visitors. The Influence of Physical Evidence on the Visitors’ Decision The t-test results indicated that the variable of physical evidence including physical appearance management personnel, cleanliness, comfort and provision of tourist guides are not significantly influential to the visitors’ decision. In general tourism industry, the appearance of physical facilities of manager or officer who is on location is important because these variables directly influenced attraction. Cleanliness and security are necessary in the management of tourist attraction because it greatly affects the comfort of visitors
ENTREPRENEURSHIP MANAGEMENT
in gaining travel experience. Also, the physical appearance of human resources and procurement of tour guides gave additional values for the visitors. However, based on the research, the visitors were not influenced when making their decision to come to visit the natural tourist site, Kawah Putih again. However, it is not an absolutely deemed important decision given by the visitors. According to the visitors, physical evidence is considered be common and beneficial as it brings positive values for improving the physical appearance of Kawah Putih. Based on these conditions, it explains why the variable of physical appearance did not significantly influence the decision of visitors.
CONCLUSIONS AND RECOMMENDATIONS Conclusions Based on the analysis and discussion, it can be concluded that the marketing mix variables that significantly influence the decision of visitors include product, price, place, promotion and people. Process and physical appearance variables do not significantly affect the decision of visitors, but in regards to marketing of tourist services, it is still important and should be improved. The components of marketing mix in Kawah Putih are reasonably effective in their implementation as the number of visitors increases every year, thus the shifting of marketing goals of the customer acquisition to customer loyalty (customer retention) should be conducted immediately.
Recommendations There are a number of suggestions for the management, one of which is to improve the marketing mix variables that are considered to be influential to the decisions of visitors and to maintain marketing mix variables which are suitable with the expectations of visitors and fulfill the criteria of managerial implications per variable proposed. Besides, the management may add functionality of the product other than as a tourist attraction site, typical procurement of Ciwidey’ cultural attractions by the surrounding community each week, cooperation resort area branding, product development with the acquisition of a new means of support, price discrimination based on visitation time, members of the club visitor amenities, cooperation with travel agents in Bandung to facilitate access to tourist sites, promotion of cooperation with the Department of Bandung Tourism area, promotion of cooperation with
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX ANALYSIS OF NATURAL TOURISM AREA 'KAWAH PUTIH’ AND ITS EFFECT...
the bank, increase in promotion via SMS/email and Internet Marketing Blast through Google Ads, increase in the image branding of the brand with the travel pool or a strategic location in Bandung, attractive new prospective visitors to the cooperation with various companies and communities, liabilities of "greetings" in management officers, employees’ passing Award of "Employee of the Month", provision of flexible payment facilities for visitors, procurement means of communication between officers in the field and the existing officers in the office, communication between the Procurement of Officers in the field and existing Officer in the Office, and Procurement of CCTV in the area of natural attraction Kawah Putih. Assessment and monitoring of each performance period of the marketing mix in the tourist area are needed to maintain the marketing mix performance. There are needs of improvements in the travelling process and physical appearance of a tourist attraction. This can be established by improving the infrastructure and increasing the physical qualities of the nature of Kawah Putih. Physical changes can be carried out either in the form of uniform or provision of additional means of support in order to support the convenience of visitors so that they get additional travelling value and natural attraction which also has its own characteristics beside the products offered. The management can conduct a similar study on the natural attractions managed by the private sector to seek for benchmark of the managed tourist areas. Subsequent research can be used to continue examining the influence of marketing mix variables on the decision of visitors after the improvement. Future studies also can examine the variables of the marketing mix for another tourist destination like Mount Maras or crater which is also visited by many local and foreign tourists. Future studies can investigate more deeply the influence of marketing mix variables on the visitors’ satisfaction or loyalty. This can be carried out before the manager changes the marketing objectives that still focus on acquisition of the buyers (customer acquisition) which later will be shifted to customer loyalty (customer retention). A need of in-depth interviews or searching for information from local tourism agencies on the things that have been done by the government to improve tourism in the region so that the research results will be sharper.
107
REFERENCES Atmoko T. 2010. Strategi pengembangan ekowisata pada Habitat Bekantan (Nasalis larvatus Wurmb.) di Kuala Sambuja, Kalimantan Timur. Jurnal Penelitian Hutan dan Konservasi Alam. VII(4):425–437. Bhuiyan MAH, Chamhuri S, Mohamad IS, Rabiul I. 2014. The role of government for ecotourism development: focusing on east coast econimic region. Jurnal of Social Science 7(4): 557–564. Buckley R. 2003. Partnership in ecotourism: Australian political frameworks. International Centre for Ecotourism Research 6(2): 75–83. Engel, James FR, Blackwell, Paul M. 1994. Perilaku Konsumen. Edisi 6. FX Budiyanto, Penerjemah. Jakarta: PT. Binarupa Aksara. Getrycia W, Djatikusuma ES. 2014. Analisis faktorfaktor yang memengaruhi keputusan pembelian konsumen pada produk minuman berisotonik Pocari Sweat. Jurnal Manajemen STIE MDP 2014: 1–10. Gujarati D. 2006. Dasar-Dasar Ekonometrika. Jakarta: Erlangga. Hendarto KA. 2003. Bauran pemasaran pada jasa ekowisata. Jurnal Ilmiah Kesatuan 4(1-2):1–31. Hidayat R. 2009. Pengaruh kualitas layanan, kualitas produk dan nilai nasabah terhadap kepuasan dan loyalitas nasabah Bank Mandiri. Jurnal Manajemen dan Kewirausahaan 11(1): 59–72. Hurriyati R. 2010. Bauran Pemasaran dan Loyalitas Konsumen. Jakarta: CV Alfabeta. Iyangjaya AP. 2013. Strategi pemasaran pariwisata Kabupaten Jepara. Jurnal Penelitian Ilmu Pemerintahan 2(4): 1–9. Joehastanti. 2012. Strategi pemasaran wisata alam untuk meningkatkan kunjungan wisatawan di kawasan wisata Kabupaten Kediri. Jurnal Ilmu Manajemen 1(2): 61–73. Karta NPA, Suarthana IKP. 2014. Strategi komunikasi pemasaran ekowisata pada destinasi wisata Dolphin Hunting Lovina. Jurnal Manajemen Strategi Bisnis dan Kewirausahaan 8(1):45–51. Kesrul M. 2003. Penyelenggaraan Operasi Perjalanan Wisata. Jakarta: Gramedia. Kotler P. 2006. Principles of Marketing. 10th edition. New Jersey: Prentice Hall Upper Sadle River. Kotler P. 2011. Manajemen Pemasaran. Edisi 14. Jakarta: PT. Indeks Kelompok Gramedia.
_______________________ WORLD TECHNOLOGIES _______________________
108
Lita RP. 2010. Pengaruh implementasi bauran pemasaran jasa terhadap proses keputusan wisatawan mengunjungi obyek wisata di Kota Padang. Jurnal Doktor Ilmu Manajemen Universitas Andalas 2(2): 91–99. Lovelock, Lauren W. 2002. Service Marketing and Management. New Jersey: Prentice Hall International Inc. Lupiyoadi, Hamdani. 2006. Manajemen Pemasaran Jasa. Edisi Kedua. Jakarta. Martaleni. 2011. Pertumbuhan pariwisata global: tantangan untuk pemasaran daerah tujuan wisata. Jurnal Manajemen Teori dan Terapan 4(2): 18– 27. Muhajirin, Iwan S. 2010. Pengembangan ekowisata (Ecotourism) pada lingkungan permukiman tradisional di Desa Undisan, Kecamatan Tembuku, Kabupaten Bangli Provinsi Bali. Masalah Bangunan 45(1): 20–30. Palilati A. Pengaruh nilai pelanggan, kepuasan terhadap loyalitas nasabah tabungan perbankan di Sulawesi Selatan. Jurnal Ekonomi Manajemen 9(1): 73–81. Postica D. 2014. Current development level of ecotourism and eco-touristic product in
ENTREPRENEURSHIP MANAGEMENT
Moldova. International Journal of Business and Social Science 5(7): 83–94. Putri S. 2012. Analisis sikap konsumen terhadap maskapai penerbangan dan pengaruh persepsi resiko terhadap keputusan menggunakan pelayanan jasa Garuda Indonesia [tesis]. Bogor: IPB. Riege AM, Perry C. 2000. National marketing strategies in international travel and tourism. Europan Journal of Marketing 34(11/12): 1290–1305. Sumarwan, U. 2014. Metode Riset Bisnis dan Konsumen. Bogor: IPB Press. Taufik. 2013. Pengaruh media iklan terhadap pengambilan keputusan konsumen membeli pasta gigi konsumen. Jurnal Pendidikan Bisnis dan Ekonomi (BISE) 1(1): 1–11 Tjiptono F, Candra G. 2012. Pemasaran Strategik. edisi II. Yogyakarta: Andi Offset. Wangsa MA, Otto RP, Yansor D. 2012. Analisis marketing mix terhadap keputusan pembelian pakan ternak Japfa di Sulawesi Selatan (Studi kasus di PT. Japfa Comfeed Indonesia, Tbk Unit Makasar). Jurnal Program Pascasarjana UNHAS 12:1–14.
_______________________ WORLD TECHNOLOGIES _______________________
DETERMINing SMALL AND MEDIUM INDUSTRY MAIN PRODUCT IN BANYUMAS DISTRICT
12
Muhammad Unggul Abdul Fattah*)1, Arief Satria**), and Gendut Suprayitno***) *) The Indonesian National Counter-Terrorism Agency (BNPT) BNPT Kompleks IPSC, Jl. Anyar Desa Tangkil Sentul, Bogor 16180 **) Department of Communication and Community Developmen, Faculty of Human Ecology, Bogor Agricultural University Jl. Kamper, Campus IPB Darmaga, Bogor, 16680 ***) Program Master of Industrial Engineering, National Institute of Science and Technology Campus III ISTN, Jl. PLN Durentiga, Pasar Minggu, Jakarta 12760
ABSTRACT The purpose of this study was to determine the main product out of several alternative options of small and medium industries (IKM) main product in Banyumas District. The study was conducted by using in-depth interviews with respondents who were skillful experts with the authority to establish the main product in Banyumas. The criteria used in determining the main product come from 12 criteria set out in the Regulation of the Ministry of Home Affairs of Republic of Indonesia Number 9 of 2014. The establishment of criteria values was determined by using AHP and main product assessment with MPE. The results of the assessment indicate that the first priority of main product Banyumas is the coconut sugar. Coconut sugar products are supported by the abundance of natural resources of raw materials, while the other main product priorities include mendoan tempeh and getuk gerbong which are typical products of Banyumas. Both products are products that will facilitate economic growth through tourism as a specific sector for culinary products of Banyumas. Keywords: main product, small and medium industries (IKM), AHP, MPE
ABSTRAK Tujuan dari penelitian ini adalah menentukan produk unggulan daerah dari beberapa alternatif pilihan produk Industri Kecil dan Menengah (IKM) potensi di kabupaten Banyumas. Penelitian dilakukan menggunakan metode wawancara mendalam terhadap responden ahli yang memiliki kemampuan, peran serta wewenang dalam penentuan produk unggulan daerah Kabupaten Banyumas. Kriteria yang digunakan dalam penentuan produk unggulan daerah berasal dari 12 kriteria yang ditetapkan dalam Peraturan Menteri Dalam Negeri Republik Indonesia Nomor 9 Tahun 2014. Penentuan bobot kriteria dilakukan dengan menggunakan AHP dan penilaian produk unggulan daerah menggunakan MPE. Hasil dari penilaian menunjukkan bahwa prioritas pertama produk unggulan daerah kabupaten Banyumas adalah gula kelapa. Produk gula kelapa ditunjang oleh kelimpahan sumber daya alam bahan baku, Prioritas produk unggulan daerah lain adalah tempe mendoan dan getuk gerbong yang merupakan produk khas kabupaten Banyumas. Kedua produk tersebut merupakan produk yang mampu mendorong pertumbuhan ekonomi melalui sektor pariwisata sebagai produk kuliner spesifik kabupaten Banyumas. Kata kunci: produk unggulan daerah, Industri Kecil dan Menengah (IKM), AHP, MPE 1
Corresponding author: Email:
[email protected]
INTRODUCTION Competitiveness is one trait that is highly required in competing within free trade market. The phenomenon of this trait will be directly related to the development of the construction going on in a particular area. According to Daryanto (2004), the concept of development in a region must adhere to the conditions of the area (inward looking). The selection of priority
development refers to the needs of the community in which the welfare of the society is the major priority. The concept of development of various dimensions applied to a region often comes across the fact that the concept requires modification or adjustment to suit to the local characteristics (local specific). Economic development which is only pursuing the high growth by relying solely in the comparative advantages; e.g. abundant natural resources, cheap labor wages, and
_______________________ WORLD TECHNOLOGIES _______________________
110
strategic position, however, in this time, is difficult to maintain any longer. Competitiveness cannot be obtained from factors like low wages or low interest rate, yet it must also be obtained from the ability to perform continuous improvement and innovation. In the era of local autonomy, the authority of the local head to manage the resources within its territory aims to be used to trigger the industrial developmental strategy whose formulation should involve elements of the government including the local government along with all business actors and related parties. The fundamental objective of local economic development is the improvement of social welfare in the region through an increased competitiveness. According to Muchdie (2000), the advantage of competitiveness in an area will be formed when the region has a core competence which can be distinguished from other areas. This local core competence can be applied through the creation of various production factors that can lead to far better achievement of the area than its local competitors. To support the core competence areas, the area potential needs to be optimally developed into a competitive main product and to improve the welfare of the society in accordance with the conditions and signatures of the area. According to (Alfita, 2011), the local main products do not need to be made from the high-tech industries or with high investment. Nevertheless, a main product can be made from local products. Steps need to be taken to ensure the main product development goals can be achieved; i.e. increasing the capacity of local institutions and documenting the main product development in the local planning documents (Ministry of Home Affair, 2014). Therefore, to support the core competencies, the main product needs to be determined as being able to improve the welfare of the people in Banyumas District. The establishment of main product is highly important because main product are products, both in the form of goods and services, produced by cooperations, potential small-medium scaled businesses which need to be developed by utilizing all resources owned by the region; i.e. natural resources, human resources and local culture, as well as by bringing in revenue for the community and the government, and these products are expected to be the economic power for the region and local communities and to be the potential products with competitiveness, marketability, thrust and capacity to penetrate the global market.
ENTREPRENEURSHIP MANAGEMENT
As a district with the second rank of competitiveness in level II district of Central Java Province, after Magelang District in 2010 and based on the BPMD study in Millah (2013), the establishment of main product Banyumas District will provide major contribution to local economic growth. In establishing the main product of Banyumas, there are two (2) issues which must be resolved. The first problem is how to calculate the weight of main product selection criteria in Banyumas, and the second one is whether the result of the main product establishment is based on the assessment of established criteria. Completion of both problems will provide a basis to establish the main product Banyumas based on the priorities of established criteria in accordance with the conditions and the potentials that exist in Banyumas District. The final goal of this study was to determine the main product Banyumas to be utilized as the basis for IKM (SMCB) developmental strategy in Banyumas District.
METHOD This research was conducted in Banyumas District Central Java with purposive selection based on: (1) consideration of the potential products featured in Banyumas District; (2) the availability of the necessary data and support from the experts of policy makers. The instruments used in this study were in depth interviews by using a questionnaire that was designed suited to the purpose of the research on the expert respondents with the ability and the role of the authority in establishing main product in Banyumas. The selection of respondents was in line with the reference to these criteria: (1) expertise based on experience and authority comes from stakeholders; both central and local levels; (2) expertise based on data-based experience; (3) expertise based on experience in the business world; (4) expertise based on the academic analysis capabilities in the area of research. On the basis of these criteria, the expert respondents determining the main product in Banyumas come from the General Director of IKM, the Ministry of Industry, Department of Industry, Trade and Cooperation, Department of Agriculture, Forestry, and Agriculture, the Chair of Commerce and Industry (Kadin) in Banyumas, Institute of Community Services in Soedirman University, Board of Investment and Licensing Services (CEW) in Banyumas, and Local Development Planning Board (Bappeda) Banyumas.
_______________________ WORLD TECHNOLOGIES _______________________
DETERMINING SMALL AND MEDIUM INDUSTRY MAIN PRODUCT IN BANYUMAS DISTRICT
The establishment of main product in Banyumas was based on the assessment by expert respondents by using basic 12 (twelve) criteria set by the Ministry of Home Affairs (2014); i.e. (1) labor absorption where the main products are manufactured by utilizing skilled labor in the area of production in order to give effects on creating jobs and income for the local communities; (2) contribution to the economy where a product has an economic value providing benefits to the consumers, has a relation to the front and back, and gives a multiplier economic effect as well as provides economic benefits to all stakeholders and areas that produce the excellent products; (3) The local economic-based sector is a local main product that falls into the category of the basic sector in PDRB/GDP and gives the largest contribution to the local economy; (4) Renewability indicates that the main products are not minerals, yet they are gained by utilizing renewable and environmentally friendly raw materials. Minerals cannot be included as main product despite their great contribution to the local economy; (5) the socio-cultural elements in creating, producing and developing a main product utilize the talents and community institutions which are built and developed on the basis of local knowledge in reference with the characteristics and cultural heritages from generations as well as from local socio-cultural conditions; (6) Market availability means the main product are able to be absorbed in the local and national markets as well as have the potential to enter global markets; (7) Guaranteed availability of raw materials which are acquired with competitive prices and guaranteed continuity and environmentally friendly; (8) Capital is the availability and sufficiency of funds for the smooth running business as the investment and working capital needs; (9) Facilities and infrastructure for production are the advantages for main product employers to acquire facilities and infrastructure for production at a competitive price level and are easy to obtain; (10) Relevant and useful technology with elements that are not easily imitated; (11) Business management is the ability to manage the business in a professional manner by utilizing the talents and community institutions; and (12) The ability to provide value-added and profitable business. All the criteria are used to determine the main product in Banyumas as they are already used by Permana (2015) in determining the main products of Bandung District.
111
Each criterion to determine the main product was measured by using Analytical Hierarchy Process (AHP). AHP is used in some types of analysis, including determining the prioritized strategies to improve the quality of edamame (Wardani et al. 2015), measuring the main product criteria in the prioritization of IKM in Bandung (Permana, 2015), and determining the prioritized industrial development strategy of palm sugar (Evalia, 2015). After the measurement of each main product criterion was obtained, the assessment by each respondent of experts to determine main product of IKM was conducted by using MPE. The MPE in the product prioritization had been used as it was used in choosing which types of processed wood products are prospective compared to some other products produced by a company (Hamzah et al. 2005), in analyzing the potential sites of agro-industry development leading commodity (Antuli, 2007), in selecting highland vegetable products (Slamet et al. 2011), and in analyzing the choice of the main products of Bandung District (Permana, 2015). The advantages of the establishment of main product IKM by utilizing Exponential Comparative Method (MPE) are as follows: (1) to reduce possible biases in the analysis; (2) the value of the total score of each alternative decision would be significantly different because of the exponential function.
RESULTS The first results of this study are the magnitude of the weight of the criteria in establishing main product IKM in Banyumas. The weight of these criteria describes the priority given by the expert respondents and processed by using AHP. The assessment of expert respondents on potential IKM products in Banyumas used the criteria, and they were processed by using MPE to determine the main product in Banyumas District. Prior to the establishment of the main product, inventory was conducted throughout the whole potential products of IKM in Banyumas in advance. The results of the inventory of potential industry products in Banyumas are presented in Table 1.
_______________________ WORLD TECHNOLOGIES _______________________
112
ENTREPRENEURSHIP MANAGEMENT
Table 1. Lists of main product of IKM in Banyumas IKM potential products Palm sugar Essential oils Batik Banyumas Fried getuk Mendoan soybean cake Soybean crackers Soybean tofu Nopia/mino Lanting Jenang/dodol Noodle crackers Wood processing Wooden furniture Bamboo handcrafts Red bricks Roof tiles
Categories IKM of agroindustry IKM of agroindustry IKM of handcrafts IKM of food IKM of food IKM of food IKM of food IKM of food IKM of food IKM of food IKM of food IKM of forest products IKM of forest products IKM of forest products IKM of building materials IKM of building materials
The inventory results of potential IKM products in Banyumas obtained 16 (sixteen) products. 2 (two) products; i.e. coconut sugar and essential oils are classified from the agro-industry IKM processing raw materials to intermediate products. One of the 16 products is hand-crafted products, e.g. Batik Banyumas. IKM of the forest product processing in Banyumas District has the potential to be developed including wood processing, furniture and bamboo handicrafts. IKM of building material was also assessed to be potential in triggering the competitiveness in Banyumas. The majority of potential IKM products in Banyumas is dominated by food product IKM i.e. tempe mendoan, fried getuk, soybean crackers, soybean tofu, nopia/ mino, lanting, jenang/dodol, and noodle crackers. The whole potential products will be selected by the expert respondents and their priorities are determined as Main product of Banyumas. Objective
Determination of Main Product in Banyumas The first step in determining the main product IKM Banyumas District is to measure main product criteria conducted by the expert respondents by using AHP. All criteria were organized into a hierarchy to determine the prioritized main product criteria as presented in Figure 1. By using this structure, the results of the assessment of the experts were then synthesized into a single measurement. The synthesis results for the weight of each main product criterion are presented in Figure 2. From the results of the measurement of each main product criterion, it can be seen that the employment (0,180) is the primary consideration in choosing main product. Direct employment will boost economic growth in a region that will improve the welfare of the population. On the other hand, the availability of labor is able to meet the specific competencies required to be built because the correlation analysis has a significant relationship to the performance of SMEs as well as the individual performance of the workers themselves (Ardiana et al. 2010; Salmah, 2012). The economic contribution (0,147) becomes the criterion with the second largest value. Expectations of local stakeholders with the determination of the macro economic main product areas can be improved. The economy-based sector (0,130) became the third consideration in determining the main product. Main product can thrive if the product could become a sector basis in the region supported by the development of efficiency, biophysical growth superiority, and socio-economic conditions of society.
Determination of the criterion priorities of main product
Criterion Alternatives
K1
K2
K3
K4
K5
K6
K7
K8
K9
K10
K11
K12
Description: K1: Labor absorption
K5: Social Culture
K9: Production infrastructure and facilities
K2: Economy contribution
K6: Market availability
K10: Technology
K3: Economy-based sector
K7: Raw materials
K11: Business Management
K4: Renewable
K8: Capital
K12: Price
Figure 1. Hierarchy of determination of main product criterion weight by using AHP
_______________________ WORLD TECHNOLOGIES _______________________
DETERMINING SMALL AND MEDIUM INDUSTRY MAIN PRODUCT IN BANYUMAS DISTRICT
Combined
Priorities with respect to: Labor absorption Economy contribution Economy-based sector Renewable Social Culture Raw materials Capital Production infrastructure and facilities Technology Business Management Price
Inconsistency = 0,05 with 0 missing judgment.
113
.180 .147 .130 .064 .065 .084 .080 .054 .046 .064 .034
Figure 2. Synthesis of each criterion weight of main product After obtaining the weight of each criterion of main product, an assessment was carried out towards the potential products in Banyumas District. The assessment was carried out by using MPE. MPE calculation results for the determination of main product Banyumas are presented in Table 2. Based on the assessment by the experts, the prioritized main product of IKM in Banyumas District include coconut sugar products which have great potentials. Coconut sugar produced by the Banyumas District contributes up to 70% of the national supply of palm sugar (Suliyanto et al. 2013). In addition, the Indonesian palm sugar production reaches 120.000 tonnes per year which is the largest in the world. The second largest producer with a production capacity of 15.000 tons is Thailand, followed by India and the Philippines (Mustaufik, 2010). This product cannot be separated from the support of agricultural areas in Banyumas District that have great potentials of natural resources, thus, supporting the activities of the processing industries by using agricultural resources and the services industry. The coconut sugar industry run by the local community is called a household industry which absorbs labor and uses raw materials from the surroundings (Suliyanto et al. 2013). Coconut sugar is able to encourage the diversification of farming as an effort to increase farmers' income (Tarigans, 2005; Mahmud, 2008), for agro-industry of coconut sugar adds better values (Djoni and Sukandar, 2013; Sukiman et al. 2007). In the development of main product IKM of coconut sugar deres which relies on oil plantations as a source of raw materials, the framework of agro-industry development in the agropolitan should not forget that the policy alternative suited to avoid over-use of land production is the changing policy of inputs and technology (Pranoto et al. 2006).
The second and third ranks of the priority determination of main product contain mendoan tempe products and fried getuk. Both of these products are typical products of Banyumas which can also be used as a frontrunner in driving the local economy, especially to support the tourism sector (Maya Banyumas, 2012). Foods which have the ability to enhance the sustainability and uniqueness of tourist destinations strengthen the economy of the area and hospitality of a local image building (Du Rand et al. 2003; Everett and Aitchison, 2008). Tempe mendoan and fried getuk are directly or indirectly related to Banyumas District, and this will encourage and attempt the travelers to taste and try Banyumas culinary because the foods can be utilized to improve the branding of tourist destinations (Boyne et al. 2003). In the concept of local competitiveness, main product developed optimally through a variety of policy supports generates the need of related and supporting industries in the region. Porter (1998) showed that a small number of industries with high competitiveness contributes to economic activity in a geographical area and also gives the largest contribution to exports out of the region. Through the determination of main product, the local government could focus more on coordinating and integrating the sector or sub-sector of the economy that will increase the competitiveness of the region. Managerial Implication Based on these results, there are several managerial implications shaping the policies that can support the development of main product IKM of coconut sugar in Banyumas District; i.e. (1) Incorporating development planning of main product IKM of coconut sugar in the Medium Term Development Plan (RPJMD) Banyumas and Strategic Plan of Department of Agriculture,
_______________________ WORLD TECHNOLOGIES _______________________
114
ENTREPRENEURSHIP MANAGEMENT
The largest value of the expert respondents to determine the main product of IKM in Banyumas was given to coconut sugar. Coconut sugar product is supported by the availability of abundant raw materials of deres coconut in Banyumas District. Main product of coconut sugar in Banyumas District has also contributed a large level of labor absorption ranging from deres coconut farmers, artisans/producers of palm sugar, and the marketing process. Ranked second and third after the main product Banyumas are mendoan soybean cake and fried getuk. Both products are the typical products of Banyumas driven from the tourism sector.
Forestry and Estate Corps, and Department of Industry, Trade and Cooperatives; (2) Establishing a partnership between farmers of deres coconut, coconut sugar of IKM, and related and supporting industries; (3) Developing the potential coconut deres raw materials through improvement techniques of cultivation which are more advanced, efficient and environmentally friendly as well as incentives for those who apply it; and (4) Improving the quality and skills of the workforce available to support main product IKM of coconut sugar in Banyumas District through community development to form sustainable agro-industries.
Recommendations
CONCLUSIONS AND RECOMMENDATIONS
The method of determining main product by referring to the expert assessment and using the criteria set out in the Regulation of the Minister of Home Affairs No. 9 of 2014 can be used as one of the methodologies to support the local competitiveness when there is a limitation in economic as well as specific product data in the area.
Conclusions The largest weight on the criteria to determine the main product of IKM in Banyumas is the employment absorption rate. The high rate of labor absorption of main product can directly give benefit on the improvement of people's welfare. In addition, the absorption of a large workforce can provide greater employment opportunities in the area.
Table 2. Results of MPE calculation in determining main product in Banyumas Commodities
K1 5 5 5 5 5
K2 4 2 2 4 4
Palm sugar Essential oils Batik Banyumas Fried getuk Mendoan soybean cake Soybean cake 5 4 crackers Soybean tofu 5 3 Nopia/mino 5 3 Lanting 5 4 Jenang/dodol 5 3 Noodle crackers 4 3 Wood processing 5 3 Wooden furniture 5 3 Bamboo 4 4 handcrafts Red bricks 5 3 Roof tiles 5 3 Weight 0,18 0,147
Product values based on criteria K5 K6 K7 K8 5 5 5 3 2 3 5 3 5 3 4 4 4 4 5 3 4 5 5 5
K3 5 3 4 3 4
K4 4 2 2 3 3
4
3
4
3
3
4 3 3 3 3 3 3 3
3 3 3 3 2 2 2 2
4 3 2 3 3 3 3 3
4 4 4 3 3 3 3 3
5 4 4 3 4 3 3 3
3 3 0,13
3 3 3 3 0,064 0,065
4 3 0,084
Total of values
K9 5 4 4 3 3
K10 5 5 3 3 3
K11 5 2 2 3 3
K12 5 5 4 4 3
3
3
4
3
4
13,42
3 3 3 3 3 3 3 3
3 3 3 3 3 4 4 3
3 3 3 3 3 3 3 3
3 3 3 3 3 4 4 3
3 4 2 4 3 4 4 4
13,42 13,34 13,34 13,29 13,23 13,30 13,30 13,26
3 3 3 3 0,08 0,054
3 3 3 4 3 3 3 4 0,046 0,051 0,064 0,034
13,67 13,24 13,31 13,44 13,52
13,32 13,29
_______________________ WORLD TECHNOLOGIES _______________________
DETERMINING SMALL AND MEDIUM INDUSTRY MAIN PRODUCT IN BANYUMAS DISTRICT
The development of main product requires monitoring of each product set. Therefore, it takes a specific recordkeeping related to the amount of production, raw material requirements, labor absorption and amount of sales which have been conducted as evaluation materials.
REFERENCES Alfita R. 2011. Perancangan sistem pendukung keputusan penentuan prioritas produk unggulan daerah menggunakan metode Weighted Product (WP). Jombang, [Prosiding Seminar Competitive Advantage I] Lembaga Pengembangan & Penelitian Unipdu. Antuli ZA. 2007. Rancang bangun sistem penunjang keputusan pengembangan agroindustri berbasis komoditas unggulan di Propinsi Gorontalo [tesis] Bogor: Institut Pertanian Bogor. Ardiana I, Brahmayanti I, Subaedi. 2010. Kompetensi SDM UKM dan pengaruhnya terhadap kinerja UKM di Surabaya. Jurnal Manajemen dan Kewirausahaan 12(1):42–55. Boyne S, Hall D, Williams F. 2003. Policy, support and promotion for food-related tourism initiatives: a marketing approach to regional development. Journal of Travel and Tourism Marketing 14(3-4):131–154. http://dx.doi.org/10.1300/ J073v14n03_08. Daryanto A. 2004. Keunggulan daya saing dan teknik identifikasi komoditas unggulan dalam mengembangkan potensi ekonomi regional. Agrimedia 9(2):51–62. Djoni, Sukandar R, 2013. Investigation of financial and value added of crystal palm sugar agro industry. International Refereed Research Journal IV(3):8–65. Du Rand GE, Heath E, Alberts N. 2003. The role of local and regional food in destination marketing: a south african situation analysis. Journal of Travel & Tourism Marketing 14(3-4):97–112. http://dx.doi.org/10.1300/J073v14n03_06. Evalia NA. 2015. Strategi pengembangan agroindustri gula semut aren. Jurnal Manajemen & Agribisnis 12(1):57–67.http://dx.doi.org/10.17358/ JMA.12.1.57. Everett S, Aitchison C. 2008. The role of food tourism in sustaining regional identity: a case study of Cornwall, South West England. Journal of
115
Sustainable Tourism 16(2):150–167. http:// dx.doi.org/10.2167/jost696.0. Hamzah, Marimin, Saptono IT. 2005. Strategi diversifikasi produk kayu olahan Acacia mangium (studi kasus: PT Musi Hutan Persada). Jurnal Manajemen dan Agribisnis 2(2):93–112. Kementerian Dalam Negeri, 2014. Peraturan Menteri Dalam Negeri Republik Indonesia Nomor 9 Tahun 2014 Tentang Pedoman Pengembangan Produk Unggulan Daerah. Jakarta: Pemerintah Indonesia. Mahmud Z. 2008. Modernisasi usaha tani kelapa rakyat. Pengembangan Inovasi Pertanian 1(4): 274–287. Maya Banyumas. 2012. Kehangatan Tempe Mendoan Banyumas. Available at: http://www.kompasiana. com/banyumasku/kehangatan-tempe-mendoanbanyumas_551b7097a33311b228b6595c[1 Desember 2015]. Millah AN. 2013. Analisis daya saing daerah di Jawa (studi kasus: Kota Semarang, Kota Salatiga, Kota Surakarta,Kota Magelang, Kota Pekalongan, dan Kota Tegal Tahun 2009-2011), [Skripsi] Semarang: Fakultas Ekonomika Dan Bisnis Universitas Diponegoro. Muchdie. 2000. Kompetensi Insti Sektor Unggulan di KAPET Manado-Bitung. Dalam: Suhandojo, S. H. Mukti & Tukiyat, penyunt. Pengembangan Wilayah Perdesaan dan Kawasan Tertentu : Sebuah Kajian Eksploratif. Jakarta: Direktorat KTPW-BPPT. Mustaufik. 2010. Pengembangan Agroindusti Gula Kelapa Kristal Sebagai Sumber Gula Alternatif. Purwokerto: Lembaga Penelitian dan Pengabdian Kepada. Permana A. 2015. Perumusan strategi resiliensi pelaku usaha dan daya saing industri kecil menengah berbasis sumber daya lokal [Tesis] Bogor: Institut Pertanian Bogor. Porter M. 1998. On Competition. 1st ed. Massachusetts: Harvard Business School. Pranoto S, Ma'arif S, Sutjahjo SH, Siregar H. 2006. Pembangunan perdesaan berkelanjutan melalui model pengembangan agropolitan. Jurnal Manajemen & Agribisnis 3(1):45–53. Salmah NNA. 2012. Pengaruh program pelatihan dan pengembangan karyawan terhadap kompetensi karyawan pada PT. Muba Electric Power Sekayu. Jurnal Ekonomi Dan Informasi Akuntansi (JENIUS) 2(3):278–290. Slamet AS, Marimin, Arkeman Y, UdinF, 2011. Studi
_______________________ WORLD TECHNOLOGIES _______________________
116
peningkatan kinerja manajemen rantai pasok sayuran dataran tinggi di Jawa Barat. Agritech 31(1):60–70. Sukiman, Dumasari, Budiningsih S. 2007. Analisis kelayakan usaha agroindustri gula kelapa di Desa Panerusan Kulon Kecamatan Susukan Kabupaten Banjarnegara. Agritech IX(1): 36– 52. Suliyanto, Suroso A, Jati DP. 2013. Potential and
ENTREPRENEURSHIP MANAGEMENT
Problems of Small Medium Enterprise (SMEs)coconut-sugar: case study in Banyumas Regency, Central Java-Indonesia. International Journal of Business and Management 8(3):18–26. Tarigans DD. 2005. Diversifikasi usahatani kelapa sebagai upaya untuk meningkatkan pendapatan petani. Perspektif: Review Penelitian Tanaman Industri 4(2):71–78. Wardani DK, Marimin, Kasutjianingati. 2015. Strategi peningkatan kualitas untuk pasar internasional melalui penerapan manajemen kualitas total: pembelajaran dari produk edamame beku. Jurnal Manajemen & Agribisnis 12(1):36–45. http:// dx.doi.org/10.17358/JMA.12.1.36.
_______________________ WORLD TECHNOLOGIES _______________________
GENERAL TRADE PARTNERSHIP PERFORMANCE OF ALBASIA WOOD IN LEUWISADENG–BOGOR
13
Sarah Widyatami*)1, Bambang Juanda**), and Trias Andati***) *)
Badan Ketahanan Pangan dan Pelaksana Penyuluhan Pertanian, Perikanan dan Kehutanan (BKP5K) Kabupaten Bogor Jl. Sindang Baranang No.416, Bogor 16117 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus IPB Dramaga, Bogor 16680 ***) PT Adhimix Precast Indonesia Indonesia Graha Anugerah 3rd Floor, JL. Raya Pasar Minggu, No. 17 A, Pancoran, Jakarta, 12780
ABSTRACT Difficulty in market information access, low prices and quality of farmers’ production, lack of facilities and infrastructure, needs of wood supply in a quick and large quantity have generated a partnership scheme which governs the farmers and industries to make a contract that binds and controls elements of production without having them. This study assessed the performance of partnership between a farmer group of “Binawarga Tani” and sawmills of UD Jaya Abadi, UD Dalfa Kamila, UD Putra Mandiri in Leuwisadeng, Bogor District. Comparative descriptive analysis states that partnership between the farmer group of "Binawarga Tani" and three sawmills has provided adequate results for both parties (mutual benefits) with an increase in the value of production and sales better than conditions before the partnership. UD Jaya Abadi has had a strategy of product diversification and marketing that are not owned by the competitors. Partnership influences the value of cash inflows and is able to produce a surplus of cash for the actors of the partnership. Statistical analysis shows that the cash surplus of farmer group and three sawmills before and after the partnership is significantly different. The farmer group is able to achieve business efficiency with better break-even point each year. Financial performance of farmer group and partners has been improved with delta Net Present Value (NPV) of Rp14.589.233 for the farmer group, Rp88.599.757 for UD Jaya Abadi, Rp35.726.194 for UD Dalfa Kamila, and Rp96.738.609 for UD Putra Mandiri. The partnership has created business sustainability through the certainty of market and raw material supply. Keywords: trade partnership, farmer group, sawmill, financial performance
ABSTRAK Kesulitan akses informasi pasar, rendahnya harga dan kualitas hasil produksi petani, minimnya sarana dan prasarana (sarpras) yang dimiliki, kebutuhan pasokan kayu secara cepat dan dalam jumlah besar menghasilkan skema kemitraan yang mengatur agar petani dan pelaku usaha membuat perjanjian yang mengikat dan mengontrol unsur-unsur produksi, tanpa harus memiliki unsur-unsur tersebut. Penelitian ini menilai kinerja kemitraan yang telah terjalin antara kelompok tani “Binawarga Tani” dengan perusahaan penggergajian UD Jaya Abadi, UD Dalfa Kamila, dan UD Putra Mandiri di Leuwisadeng Kabupaten Bogor. Analisis deskriptif menghasilkan bahwa kemitraan dagang umum antara kelompok tani “Binawarga Tani” dengan dengan ketiga perusahaan penggergajian telah memberikan hasil memadai bagi kedua pihak (mutual) dengan peningkatan nilai produksi dan penjualan yang lebih baik dibandingkan kondisi sebelum kemitraan, khususnya UD Jaya Abadi telah memiliki strategi diversifikasi produk dan pemasaran yang tidak dimiliki oleh pesaingnya. Kemitraan berpengaruh terhadap nilai arus kas masuk serta mampu menghasilkan surplus kas bagi para pelaku kemitraan. Hal tersebut diperkuat dengan analisis statistik bahwa surplus kas kelompok tani dan ketiga perusahaan penggergajian sebelum dan setelah kemitraan berbeda nyata. Analisis titik impas menunjukkan kelompok tani telah mampu mencapai efisiensi usaha dengan kondisi pulang pokok yang semakin membaik setiap tahunnya. Kinerja kelompok tani dan mitra secara finansial membaik dengan nilai delta Net Present Value (NPV) sebesar Rp14.589.233 untuk kelompok tani, Rp88.599.757 untuk UD Jaya Abadi, Rp35.726.194 untuk UD Dalfa Kamila, Rp96.738.609 untuk UD Putra Mandiri. Secara non finansial, kemitraan telah menciptakan sustainability usaha dengan adanya kepastian pasar dan pasokan bahan baku. Kata kunci: kemitraan dagang umum, kelompok tani, perusahaan penggergajian, kinerja finansial 1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
118
INTRODUCTION At the beginning of agricultural commercialization in the decade of 1970, the major problem faced by the Indonesian farmers was how to sell their products to the market. After two decades, the farmer’s main problem becomes the difficulty in accurate market information access besides low price and agricultural product quality. Availability of marketing problem solutions is expected to reduce interference of market channels and number of parties involved in the transaction as well as to ensure transparency of price (Andri, 2009). In addition to the price and market guarantee issue, the government mindset as the state officials today prefers job provisions in the industrial sector, thus ignoring primary products (agriculture) (Soesilowati et al. 2011). Unconciously, the industrial and agricultural sectors are inseparable because they are a process of upstream and downstream agribusiness. With the development of industrial sector, not least the timber industry, the market demand for wood increases. It has an impact on quick timber demand and supply in large quantities. These problems ultimately produce a strategic partnership between farmers and companies. Partnership scheme is set up for both sides to form a binding contract and control the production elements without having them so that both parties remain to be free in determining the functions of the business. In the forestry sector, in particular, the problem of this partnership has been incorporated into the Strategic Forestry Development Goals by 2013. Key Performance Indicators of the Extension field and Human Resources Development Ministry of Forestry (IKU Kemenhut) aim to establish 10 partnerships through enhancement of participation of key actors and businesses in the community empowerment (Ministry of Forestry, 2012). In accordance with these targets, the local government, in this case Forestry Agency and Counseling Agency in every area have the duty to encourage and facilitate the farmers in the region to build a good partnership with the private sector (businesses) through good coordination, so that the capital constraints, infrastructure, as well as knowledge and technology problems faced by farmers can be minimized. According to the Decree of the Minister of Agriculture of 940/Kpts/OT.210/10/1997, partnerships between farmer group of "Binawarga Tani" and the sawmills in this study is a general trade partnerships where the partner group (farmers) supplies the needs required
ENTREPRENEURSHIP MANAGEMENT
by a partner company (sawmills). In this partnership, sawmill as the owner of the infrastructure in the form of sawmill machine has the function to process logs into sawn timber or pallet for subsequent sale to the manufacturers/consumers. This function is not owned by the farmers because of the limited infrastructure that is owned by farmer, then this is where the partnerships is needed, so that albasia timber produced by farmers can reach consumers. Financial strength, production and marketing strategies of each partnership actors both the farmer groups and the three sawmills are needed to measure how far the partnership has given value to the parties. One of the methods which can be done is through a comparative study of partnership so that decisions whether to continue or replace the partnership model that has been running with the new partnership model which is more appropriate can be made. A good partnership is a partnership that can provide adequate results for the performers (Ostrom, 2005 in Pribadi et al. 2010). It is a measure of partnership success. Comparative study to measure partnership performance is not only with descriptive analysis but also supported by financial analysis tool used to answer the research objectives, among others: 1. Analyzing the partnership between farmer group "Binawarga Tani" and the sawmills of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri using descriptive comparative method. 2. Conducting cash flow and breakevent point analysis between farmer group "Binawarga Tani" and the sawmills of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri. 3. Analyzing business performance of farmer group and sawmills of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri using financial criteria NPV, IRR, B/C Ratio, and assumption "with" and "without" partnership.
METHOD The primary data were obtained from the observations of the farmer group "Binawarga Tani" and sawmills UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri. Meanwhile, the secondary data were taken from related government agencies such as UPT Distanhut Leuwiliang, UPT PTPHPK V Region Leuwiliang, BP3K Leuwiliang, and Leuwisadeng Sub-District Office.
_______________________ WORLD TECHNOLOGIES _______________________
GENERAL TRADE PARTNERSHIP PERFORMANCE OF ALBASIA WOOD IN LEUWISADENG–BOGOR
Sampling was carried out in Purposive Sampling on one of the farmer groups assisted by Extension of Agriculture, Fisheries and Forestry (BP3K) Leuwiliang. From the 25 existing groups (BP3K Leuwiliang secondary data), there are three groups of farmers who live close to the location of sawmill of the partner. The selection was conducted to facilitate researchers in data collection. From the 3 farmer groups, only one group of farmers who have partnered with the sawmill i.e. "Binawarga Tani. This selection was based on secondary data obtained from the relevant government agencies. Quantitative Analysis was carried out through an approach using financial performance analysis.
119
Internal Rate of Return (IRR) (Weston dan Brigham, 1990) PV Cash Inflows=PV Investment Costs
Description: IRR = internal rate of return (%) CFt = net cash flow expected in period t t = number of years Benefit/Cost Ratio (B/C Ratio) (Horne, 1992)
Calculation of Cash Flow Step-by-step preparation of the statement of cash flows: Calculating changes in cash and cash equivalents, Calculating net cash flow from operating activities, Calculating net cash flows from investing and financing activities (Horne dan Wachowicz 1995)..
Description: At = net cash flow Ao = initial cash outlay t = number of years k = the cost of capital Wilcoxon Matched-Pairs Signed-Rank Test
Break Event Point (BEP) Assumptions used in the calculation of breakeven include (Guan et al. 2009): 1. Costs associated with the level of sales are separated into the elements of fixed costs and variable costs. 2. Fixed costs will always remain fixed during the period affected by the decisions that have been taken. 3. Variable costs vary directly (proportionately) with sales during the period affected by the decisions that have been taken. 4. Economic conditions which are assumed to be stable. Steps in calculating the breakeven point: Classifying costs, Allocating costs, Calculating the break-even point (BEP) with a mathematical formula or chart.
The hypothesis used in the test was a cash surplus of cash inflows and outflows which later became the basis for calculation of financial performance using NPV, IRR and B/C Ratio. The hypotheses are as follows: Ho : Cash Surplus of the farmer group of “Binawarga Tani” and the three sawmills of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri before and after partnership is not significantly different. H1 : Cash Surplus of the farmer group of “Binawarga Tani” and UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri before and after partnership is significantly different. Nonfinancial Performance: Business Sustainability; Market Certainty; Certainty Raw Material Supply; Bargaining Position; Price Fixing
Net Present Value (NPV)(Weston dan Brigham, 1990) The qualitative analysis wascarried out by the literature study and fundamental analysis of the data obtained, both from the results of field observations and from institutions/government agencies related to research. Description: CFt = net cash flow expected in period t k = the cost of capital t n= umyboefasr
_______________________ WORLD TECHNOLOGIES _______________________
120
ENTREPRENEURSHIP MANAGEMENT
RESULT Comparative Descriptive Analysis of General Trade Partnership Trade model policy only binds farmers to supply albasia wood for each harvest with the proportions as described in Table 1 of total harvest where they have free cutting cost (harvesting) as it is borne entirely by three sawmills. Although it is horizontally integrated, the partnership with sawmills has not been maximized yet because of the unbound and uncontrolled production elements of both parties. As for the vertical integration with the government facilitator, the farmer group has been trained by the forestry extension facilitators and has joined the training which is facilitated by the Forestry Trainning Centre–Ministry of Forestry consisting of theory and practice. Also, it was given a pilot project garden (demplot) by BKP5K of Bogor District, and infrastructure such as seeds and shelter crop house by Agriculture and Forestry District Office Bogor (Distanhut). This kind of partnership model is known as the "Cooperative Farming" where there are 3 linkages of stakeholders, i.e. farmers (principal actors), sawmills (businesses), and local governments (the facilitators). Cost of timber marketing from the farmer groups to sawmills is not borne by the farmers because the buying system is done directly in the farmer group farms by the three sawmills, and it is carried out by establishing the price of the stands. Timber selling mechanism between farmer group and its partners of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri is not different i.e.in the form of stands from its farms. The costs of timber logging and making it into logs and transportation from the farms to the sawmills are borne by the companies. Cubication pricing is based on the calculations by taking into account the diameter and height of timber stands calculated by the sawmills, and it is approved by both parties. From the results of the calculation, a sales figure of Rp77.059.710, for 280
trees (standing stock) in 2011 was obtained. Albasia timber sold has a diameter ranging from 5 cm to 50 cm with a height of between 5 m and 12 m. The range of the albasia wood sale price with these specifications is from Rp10.000 to Rp300.000. Pricing per specification of standing stock is determined based on market price. UD Jaya Abadi has its own market share with a specific type of processed products, and it has one marketing channel i.e. just to the factoy, but it is continuous with the special specifications of products specified by the manufacturer to be met by UD Jaya Abadi. The strategy applied is a focused strategy in which the company emphasizes attention or focuses on a narrow product line and specific buyer segments. Meanwhile, UD Dalfa Kamila and UD Putra Mandiri have a larger market with a variety of wood products in which marketing channels are not only for one customer. However, the three sawmills remain on one community market because they use the same resources. Competitive action and reaction between a company and its competitors will affect the performance of each company.Comparative Market Competitors and Marketing Strategy in Table 2. Analysis of Cash Flow and Break Event Point of Partnership In general, there is a cash surplus increasing for the farmer group after partnership (4.3 times) (Table 3,4,5 and 6). In addition, lack of clarity and certainty of the market distribution channel are important points that greatly affect the income of the farmer group. Without certainty of the market, a large amount of production may not be marketable and profitable for the group. Albasia timber sale value was greatly different before and after the partnership. Without partnership, the buyers/wholesalers of wood do not pay attention to the quality of the wood, so the price is set equal regardless of the quality. This is disavantegeous to the farmers who have planted with quality seedlings and taken care of their albasia timber plant well.
Table 1. Comparative sales of the farmer group to each sawmill Farmer Group and UD Jaya Abadi Farmer Group and UD Dalfa Kamila Farmer Group and UD Putra Mandiri Total Source: Farmer Group and Sawmill Primary Data
Volume/Proportion 30% 35% 35% 100%
∑Sold Trees (Trunk) 84 98 98 280
Sales Rp24.369.029 Rp29.545.789 Rp23.144.892 Rp77.059.710
_______________________ WORLD TECHNOLOGIES _______________________
GENERAL TRADE PARTNERSHIP PERFORMANCE OF ALBASIA WOOD IN LEUWISADENG–BOGOR
121
Table 2. Comparative Market Competitors and Marketing Strategy Farmer group
The resulting product Triennial production capacity Product selling price Marketing channel
The resulting product Annual production capacity Product selling price
Marketing channel
Competitors Albasia Albasia, Jabon, Durian, Mahoni, Akasia 700–9000 cubic 250–30.000 cubic cubication calculation in accordance to cubication calculation in accordance to the the market standard market standard Sadeng village Leuwisadeng Leuwiliang, Leuwisadeng, Sukajaya, Jasinga, Subdistrict of Bogor, namely, UD Jaya Rangkasbitung, Lebak, Bogor, Jakarta Abadi, UD Dalfa Kamila, dan UD Putra Mandiri Sawmills Competitors Wood projects, Raw materials, Pallets Wood projects, Raw materials, Pallets, Moulding 1800–3600 m3 600–2000 m3 Based on market price, but for Based on market price partnership, it is determined by the manufacturer partner Partner Factory (PT Asahimas) Jakarta, Leuwisadeng, Bogor, Jakarta, Bekasi Kalibaru, Bojong Gede, Parung, Cibinong, Leuwisadeng, Bogor
Table 3. Cash cash flows of farmer group of “Binawarga Tani” before partnerships, after partnerships, and projections of years of 2008–2016 (in millions)
∑ Cash Entry ∑ Cash Out Surplus/Deficit
Before partnerships 31/12/08 31/12/09 31/12/10 282 261 426 219 186 333 63 75 93
After partnerships Projections 31/12/11 31/12/12 31/12/13 31/12/14 31/12/15 31/12/16 608 485 576 871 1.755 3.898 339 233 333 512 1.033 1.932 269 252 243 359 722 1.966
Table 4. UD cash flow of "Jaya Abadi" before partnerships, after partnerships, and projections of years of 2008– 2016 (in millions)
∑ Cash Entry ∑ Cash Out Surplus/Deficit
Before partnerships 31/12/08 31/12/09 31/12/10 3.510 3.198 3.266 2.851 2.751 2.951 659 447 315
After partnerships Projections 31/12/11 31/12/12 31/12/13 31/12/14 31/12/15 31/12/16 3.728 3.536 3.786 4.807 4.806 4.875 2.751 2.751 2.751 2.924 2.924 2.924 977 785 1.035 1.883 1.882 1.951
Table 5. Cash Flow of "UD Dalfa Kamila" before partnerships, after partnerships, and projections of years of 2008–2016 (in millions)
∑ Cash Entry ∑ Cash Out Surplus/Deficit
Before partnerships 31/12/08 31/12/09 31/12/10 2.116 1.945 2.053 1.343 1.348 1.353 773 597 700
After partnerships Projections 31/12/11 31/12/12 31/12/13 31/12/14 31/12/15 31/12/16 2.368 2.223 2.341 3.059 3.130 3.231 1.356 1.363 1.370 1.583 1.586 1.590 1.012 860 971 1.476 1.544 1.641
Table 6. Cash Flow of "UD Putra Mandiri" before partnerships, after partnerships, and projections of years of 2008–2016 (in millions)
∑ Cash Entry ∑ Cash Out Surplus/Deficit
Before partnerships 31/12/08 31/12/09 31/12/10 2,180 2,165 2,221 1,989 1,989 1,996 191 176 225
After partnerships Projections 31/12/11 31/12/12 31/12/13 31/12/14 31/12/15 31/12/16 2,536 2,536 2,657 3,379 3,373 3,434 1,999 2,088 2,093 2,283 2,281 2,287 537 448 564 1,096 1,092 1,147
_______________________ WORLD TECHNOLOGIES _______________________
122
ENTREPRENEURSHIP MANAGEMENT
Compared with the farmer group, the sawmills tend to be aggressive with their sales every year. However, cash surplus value of sawmills is not as agressive as their sales, and there is a periodical increase with a normal range that is not as much as the farmer group’s range. This is because the high value of the expenditure on the acquisition of raw material components in general. The cost of labor is the highest cost because the logging process requires special hired laborers with a wage from Rp200.000 to Rp300.000 per 1 person per day. Statistical analysis of cash flows was performed to test the hypotheses based on observational comparative sample pairs of the farmer group and the three sawmills. Non-parametric test using Wilcoxon Matched-Pairs Signed-Rank Test concludes that cash inflows of the farmer group and sawmills are significantly different; on the other hand, Wilcoxon test of cash outflows concludes that cashoutflows of the farmer group and the sawmills are not significantly different (Figure 1). Components of income, capital, profit and depreciation have positive influences on the differences in the values of farmer group and the three sawmills cash inflows. In other words, there are changes in components of cash inflows before and after the partnerships both at the farmer group and three sawmills. In contrast, both cost components of nursery/acquisition of raw materials, planting/operation, and maintenance/marketing costs tend not be changed before and after the partnership. Sales charts before and after the partnership both for the farmer group and three sawmills have increased
continuously from 2008 to 2016. Although there is no partnership, the farmer group has been trying to increase its sales to meet customers’ needs; however, the cost is higher than that after the partnership. Meanwhile, after the partnership, sales have increased higher than before the partnership. It shows that with a partnership the economic condition of the farmer group and three sawmills is better than that without a partnership. The chart of the Break Event Point (BEP) shows that the conditions before and after partnerships of the three sawmills in the period of 2008–2016 tend to be stable, while BEP of the farmer group has decreased. It shows that without partnerships, the farmer group is also able to to have break even (profit) although the number of sales becomes lower each year. The sawmills are also able to monitor fluctuations in sales and expenses at the level of fixed costs and certain variables. Partnership Performance Analysis Using Financial Criteria NPV, IRR, B/C Ratio Assumption "With" and "Without" Partnership Net Present Values (NPV) of the Farmer Group, UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri are worth >0 so that it can be concluded that both parties (the farmer group and sawmills) in this trade partnership gain business profits more than business costs that they incurred. If the partnership of NPV calculation is feasible, then the calculation of B/C Ratio or Profitability Index is automatically feasible because the amount of benefits/advantages outweighs the costs or the amount of component of B/C Ratio of > 1.
Figure 1. Output cash flow significant different test
_______________________ WORLD TECHNOLOGIES _______________________
GENERAL TRADE PARTNERSHIP PERFORMANCE OF ALBASIA WOOD IN LEUWISADENG–BOGOR
Calculation result of the partnership by using Internal Rate of Return (IRR) method shows that the IRR values of the farmer group, UD Jaya Abadi, UD Dalfa Kamila, dan UD Putra Mandiri are higher than applicable interest rate (18%), thus indicating that trade partnerships are stated to be feasible. However, in terms of productivity, it has not been efficient because of long production cycle while the market needs are at any time. Thinning system is applied in order to shorten the production cycle, so that the continuity of supply to sawmills can be maintained. For the sawmills of UD Jaya Abadi, UD Dalfa Kamila, and UD Putra Mandiri with the assumption without partnerships, their business performance has been considered to be good with the financial criteria values as required, i.e. NPV>0, IRR>cost of capital interest rate, and B/C Ratio>1. Partnership is able to increase the sales of the farmer group of “Binawarga Tani” by 10.09%. The condition is achieved by a clearcut harvesting model. After the extension by the local authorities, the farmers start to implement selective logging system harvesting
123
model with two times of thinning. With this method, the farmer group of "Binawarga Tani" gets benefits, in addition to obtaining bigger albasia wood due to longer period of growing. Also the farmer group can supply albasia timber thinning products to the mills, so every year the farmer group can still earn revenue from their plantation. From the partnership assumption, it can be seen that the financial criteria values of NPV, IRR, and B/C Ratio are qualified and feasible for partnership program. The differences of financial performance with and without partnership assumption can be seen in Table 8. Financial performance data assumptions "with" and "without" the partnership cannot be separated from the calculation of cash inflows, cash outflows, cash surplus, sales and BEP level as the calculation basis (Figure 2 and 3). To determine the level of sales which results in a gain or loss of farmer group and sawmills where this level is included as a performance indicator of the partnership, the break event point analysis which is depicted in the BEP level graph was made.
Tabel 8. Comparative of financial performance assumption with and without partnership (2008–2016) NPV IRR B/C Ratio Assumption Without Partnership Rp305.884.930 With Partnership Rp320.474.163 Sawmill Without Partnership Rp1.529.192.799 UD Jaya Abadi With Partnership Rp1.617.792.556 Sawmill Without Partnership Rp1.956.485.150 UD Dalfa Kamila With Partnership Rp1.992.211.344 Sawmill Without Partnership Rp631.850.957 UD Putra Mandiri With Partnership Rp728.589.566 Source: Processed Data of Farmer Group and Sawmills 2013
39,24% 39,06% 46,38% 44,77% 46,58% 45,97% 43,21% 40,69%
500.000.000
500.000.000
400.000.000
400.000.000
Sales BEP (Rp)
Sales BEP (Rp)
Farmer Group “Binawarga Tani”
300.000.000 200.000.000
1,40 kali 1,55 kali 1,22 kali 1,23 kali 1,57 kali 1,58 kali 1,13 kali 1,16 kali
300.000.000 200.000.000 100.000.000
100.000.000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Years BEP Farmer Group BEP UD Dalfa Kamila Linear (BEP Farmer Group) Linear (BEP UD Dalfa Kamila)
BEP UD Jaya Abadi BEP UD Putra Mandiri Linear (BEP UD Jaya Abadi) Linear (BEP UD Putra Mandiri)
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Years Farmer Group Sales UD Dalfa Kamila Sales Linear (Farmer Group Sales) Linear (UD Dalfa Kamila Sales)
UD Jaya Abadi Sales UD Putra Mandiri Sales Linear (UD Jaya Abadi Sales) Linear (UD Putra Mandiri Sales)
Figure 2. Sales and sales BEP rate chart without partnership assumption (2008–2016)
_______________________ WORLD TECHNOLOGIES _______________________
ENTREPRENEURSHIP MANAGEMENT
500.000.000
500.000.000
400.000.000
400.000.000
Sales BEP (Rp)
Sales BEP (Rp)
124
300.000.000 200.000.000 100.000.000
300.000.000 200.000.000 100.000.000
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Years BEP Farmer Group BEP UD Dalfa Kamila Linear (BEP Farmer Group) Linear (BEP UD Dalfa Kamila)
0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Years
BEP UD Jaya Abadi BEP UD Putra Mandiri Linear (BEP UD Jaya Abadi) Linear (BEP UD Putra Mandiri)
Farmer Group Sales UD Dalfa Kamila Sales Linear (Farmer Group Sales) Linear (UD Dalfa Kamila Sales)
UD Jaya Abadi Sales UD Putra Mandiri Sales Linear (UD Jaya Abadi Sales) Linear (UD Putra Mandiri Sales)
Figure 3. Sales and sales BEP rate chart with partnership assumption (2008–2016) In general, business improvement of the farmer group and sawmills gets better from year to year, particularly after the partnership in 2011. It can be seen from the number of sales and profits which continue to increase with costs that tend to be fixed, so that cash surplus increases every year. In addition, marketing distribution channels become shorter and there is a certainty of production for sale. Sawmill also obtains security of supply of raw materials to meet the demand for lumber from the mill partner/customers. Managerial Implication General trade partnerships between the farmer group of "Binawarga Tani" and the three sawmills need to be strengthened with a written agreement that is binding both parties. This is where the roles of extension workers and related government services are needed to facilitate coordination between the two parties.
CONCLUSIONS AND RECOMMENDATIONS Conclusions The partnership between farmer group "Binawarga Tani" and the three sawmills has given adequate benefits for both parties (mutual benefits) with an increase in the values of production and sales better than those before the partnership especially for UD Jaya Abadi that has a strategy of product diversification and marketing which are not owned by its competitors. General trade partnerships between farmer group and the three sawmills have a positive influence on the values of cash inflows and enable them to generate a cash surplus for the perpetrators of partnerships. With or without a partnership, farmers' groups have been
able to achieve business efficiency with BEP that gets better every year. General trade partnerships have a positive influence on the financial performances of the farmer group and three sawmills with the delta value NPV of Rp14.589.233 for the farmer group, Rp88.599.757 for UD Jaya Abadi, Rp35.726.194 for UD Dalfa Kamila, and Rp96.738.609 for UD Putra Mandiri. In regards to the non-financial matter, partnership has created a sustainable business with the certainty of market and supply of raw materials. Recommendations To further maximize cash surplus, the farmer group needs to improve one component of cash inflows, both operational cash flow and incremental cash flow to further increase sales volume or quality of logs of wood. Improved performance of the partnership based on NPV, IRR and B/C Ratio can be carried out by starting to set aside group profit sharing for business turnover to increase sales and wood quality. In addition, reduction on acquisition costs of raw materials needs to be implemented to achieve efficiency so that BEP value is not at high level of sales. Improved BEP will have an impact on improving the performance of partnership.
REFERENCES Amiluddin. 2010. Kemitraan usaha dan jaringan sosial pembudidaya rumput laut di Kabupaten Bone (Studi Kasus Kelurahan Pallete Kecamatan Taneteriattang Timur) [thesis]. Makassar: Fisheries and Marine Science Graduate University of Hasanuddin.
_______________________ WORLD TECHNOLOGIES _______________________
GENERAL TRADE PARTNERSHIP PERFORMANCE OF ALBASIA WOOD IN LEUWISADENG–BOGOR
Andri KB. 2009. Kemitraan petani kecil dengan industri pertanian di Jawa Timur. Jurnal Salam 23(1): 25–27. Augustina L. 2005. Analisis finansial kemitraan penambahan modal PT Bogasari bagi peternak sapi perah anggota Koperasi Warga Mulya Kabupaten Sleman [thesis]. Yogyakarta: Master of Agribusiness Management Universitas Gadjah Mada. Bank Indonesia. 2010. Peluang Peningkatan Pendapatan Petani Karet Melalui Kerjasama Kemitraan Pemasaran Bokar dengan Pabrik Crumb Ruber. Jakarta: Bank Indonesia. Basari Z. 2004. Analisis biaya pemanenan kayu bulat sistem kemitraan HPH - Koperasi Desa di Kalimantan Tengah. Jurnal Penelitian Hasil Hutan 22(2): 113–122. Blocher EJ, David ES, Gary C. 2010. Cost Management: A Strategic Emphasis. New York: Mc Graw Hill. Erfit. 2011. Model kemitraan contract farming pada agribisnis hortikultura. Jurnal Embrio 4(1): 6–17. Guan et al. 2009. Cost Management. Oklahoma: SouthWestern Cengage Learning. Horne JCV. 1992. Financial Management and Policy. New Jersey: Prentice Hall International, Inc. Horne JCV, Wachowicz JM. 1995. Fundamentals of Financial Management. New Jersey: Prentice Hall International, Inc. Kuncoro M. 2000. Usaha Kecil di Indonesia: Profil, Masalah dan Strategi Pemberdayaan. Stadium Generale Strategi Pemberdayaan Usaha Kecil di Indonesia; Yogyakarta, 18 November 2000. Yogyakarta: Postgraduate Economics UGMSTIE Yogyakarta. Kusumedi P, Ani N. 2010. Analisis pengelolaan dan finansial hutan rakyat kemitraan di Kabupaten Bulukumba Propinsi Sulawesi Selatan. Jurnal Penelitian Sosial dan Ekonomi Kehutanan 7(1): 1–21. Martin E. 2008. Evaluasi kinerja ekonomi hutan tanaman industri pulp pola kemitraan. Jurnal Info Sosial Ekonomi 8(2): 87–98.
125
Ministry of Agriculture. 1997. Keputusan Menteri Pertanian RI Nomor 940/Kpts/Ot.210/10/1997 tentang Pedoman Kemitraan Usaha Pertanian. Jakarta: Ministry of Agriculture. Ministry of Forestry. 2012. Permenhut RI Nomor: P.37/Menhut-II/2012 tentang Rencana Kerja Kementerian Kehutanan Tahun 2013. Jakarta: Ministry of Forestry. Nimwegen PV, David L, Jerome V. 2009. Prospek Agroforestri Kayu–Makanan Ternak–Hewan Ternak Terintegrasi bagi Diversifikasi Ekonomi pada Masyarakat Pertanian Timor Barat. Laporan penelitian SADI-ACIAR Australian Centre for International Agricultural Research, Southern Course University. New South Wales: Australian Centre for International Agricultural Research. Nuryanti S. 2005. Pemberdayaan petani dengan model cooperative farming. Jurnal Analisis Kebijakan Pertanian 3(2): 152–158. Pabotinggi M et al. 2001. Membangun Kemitraan antara Pemerintah dan Masyarakat Madani untuk Mewujudkan Tata Pemerintahan yang Baik. Seminar Bappenas; Jakarta, 10 Oktober 2001. Jakarta: Bappenas Good Public Governance Development Secretariat. Pribadi N et al. 2010. Kelembagaan kemitraan industri pengolahan kayu bersama rakyat untuk membangun hutan di Pulau Jawa. Jurnal Penelitian Sosial dan Ekonomi Kehutanan 7(2): 127–138. Siregar H Daryanto A. 2005. Perkembangan dan diversifikasi ekspor indonesia. Jurnal Manajemen dan Agribisnis 2(2): 157–166. Soesilowati E, Dyah RI, Widiyanto. 2011. Model corporate social responsibility dalam program pemberdayaan petani hortikultura. Jurnal Ekonomi Pembangunan 12(1): 102–117. Weston JF, Brigham EF. 1990. Essentials of Managerial Finance. New York: Dryden Press. Widyaningsih TS, Budiman A. 2012. Analisis finansial usahatani hutan rakyat pola wanafarma di Majenang Jawa Tengah. Jurnal Penelitian Hutan Tanaman 9(2): 105–120.
_______________________ WORLD TECHNOLOGIES _______________________
14
Marketing Mix Factors that Influence the Desire to Purchase Fruit Beverages in the City of Bogor Iffatul Ulfah*)1, Ujang Sumarwan**), and Dodik Ridho Nurrochmat***) School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Family and Consumer Sciences, Faculty of Human Ecologi, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga, Bogor 16680 ***) Department of Forest Management, Faculty of Forestry, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga PO Box 168, Bogor 16680 *)
ABSTRACT The objectives of this research were 1) to analyze marketing mix factors that influence the desire to purchase fruit beverages, 2) to formulate the marketing strategies of fruit beverages at restaurant based on fruit beverages in the city of Bogor. This research was conducted by using descriptive methods through survey approach. Data was collected in questionnaires, using non probability sample approach with convenience sampling technique. Variables measured were 7P’s marketing mix factors, namely product, place, price, promotion, physical evidence, process and people. The analysis that were used were descriptive analysis and discriminant analysis. The result of this research shows that price and physical evidence were two factors that discriminate consumer behaviour. This means that the purchase intention (desire) between consumers who buy and consumers who do not buy fruit beverages were affected by price and physical evidence factors. The discriminant function that discriminate consumers purchase intention is D = -3,339+0,619Physical+0,899Price and cut-off value -0,18624. This means that if discriminant value (D)is higher than -0,18624, the consumer belongs to the group of consumer who will buy the fruit beverages and vice versa. Keywords: consumer behaviour, purchase intention, marketing mix, discriminant analysis
ABSTRAK Penelitian ini bertujuan 1) menganalisis faktor bauran pemasaran yang memengaruhi keinginan membeli minuman es buah, 2) merumuskan strategi pemasaran minuman es buah pada restoran berbasis minuman es buah di Kota Bogor. Penelitian dilakukan menggunakan metode deskriptif dengan pendekatan survei. Data dikumpulkan melalui penyebaran kuisioner terhadap konsumen minuman es buah, menggunakan pendekatan non probability sample dengan teknik convenienve sampling. Variabel yang diukur adalah unsur-unsur bauran pemasaran 7P, yaitu product, place, price, promotion, physical evidence, process dan people. Analisis yang digunakan adalah analisis deskriptif dan analisis diskriminan. Hasil penelitian memperlihatkan bahwa unsur price (harga) dan physical evidence (lingkungan fisik) merupakan faktor bauran pemasaran yang membedakan perilaku konsumen. Hal ini diartikan bahwa keinginan konsumen untuk membeli dan tidak membeli minuman es buah dipengaruhi oleh faktor harga dan lingkungan fisik. Adapun fungsi diskriminan yang membedakan keinginan membeli yaitu D = -3,339 + 0,619 Physical + 0,899 Price, dengan nilai batas sebesar -0,18624. Hal ini dapat diartikan apabila nilai diskriminan (D) lebih besar dari nilai -0,18624 maka konsumen tersebut masuk ke dalam kelompok yang akan membeli minuman es buah dan sebaliknya. Kata kunci: perilaku konsumen, keinginan membeli, bauran pemasaran, analisis diskriminan
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX FACTORS THAT INFLUENCE THE DESIRE TO PURCHASE FRUIT BEVERAGES...
INTRODUCTION The increasing interest of people and tourists in culinary tourism has given a chance to entrepreneurs to open up a culinary business. In addition, the people’s consumptive behavior and lifestyle tend to consume foods not just to meet the needs but to satisfy lifestyle. Nowadays culinary tourism in a city does not only provide typical products of that city, but also repackage the typical food products of the city or redesign the interior of the restaurants with a unique style to create a new trend. Bogor City is one of the towns that have encouraged culinary tourism as one of its powerful tourism. This is stated by the Mayor of Bogor, who targets Bogor as one of the top tourism destinations in Indonesia, by encouraging Indonesian Hotel and Restaurant Association (PHRI) to become a tourism driving force that can compete with other tourism cities (Kompas. com, 2014). One of the culinary business types that are well developed in Bogor City is fruit beverages. Sop Duren Lodaya and Sop Duren Rancamaya are restaurant business that is based on fruit beverages originating from Bogor. In the research carried by Dudesy (2014), it was stated that Sop Duren Lodaya was a pioneer of sop durian in Bogor area, which was established in 2012. Nowadays Sop Duren Lodaya has developed its business to many towns in Java Island. In the same year, Sop Durian Rancamaya started to exist, competing with Sop Duren Lodaya in Bogor City. Unlike Sop Buah Pak Ewok, Rochani (2007) said that Sop Buah Pak Ewok originated in Bandung and then in 2005 it was developed in Bogor by a young entrepreneur from Bogor using a different concept until it became a franchise business and developed as far as Sumatera. This also applies to Es Teler 77 restaurant, which is a franchise business that has developed not only in the country, but also abroad (Wikipedia, 2015). On the other hand, according to the Ministry of Agriculture in Ria (2014), the level of fruit and vegetable consumption rate of Indonesian people is still low, that is only 40 kg per capita per year. This figure is still below the Food Agriculture Organization (FAO) recommendation, which is 65 kg per capita per year. From the viewpoint of nutrition, fruit and vegetables are closely related to vitamin sources, mineral sources, both micro and macro, and fiber sources. Sujono in Nainggolan and Adimunca (2005) said that urban people, some of whom are mobile and busy, tend to consume fast-food meals. This behavior
127
causes a transition of eating pattern from that with high carbohydrates, high fiber, and low fat to eating pattern with low carbohydrates and fiber, high fat and protein. This causes high rate of diseases such as coronary heart disease, colon cancer, and other degenerative diseases in Indonesia. Some researches that have been carried out show that fruits support the body metabolism, which, if it is not fulfilled, will cause a serious disease (Santoso, 2011; Ginting, 2011; Pardede, 2013; GarciaAlonso et al. 2004; Piironen et al. 2003; and Terry et al. 2001). With reference to that, it is necessary to provide an alternative that can interest community to consume fruits. Fruit ice is another alternative that can attract people to consume fruits. This is one of the strengths of the fruit beverage-based restaurants. In order to develop entrepreneurship potential and to face challenges from fruit alternatives, it is important to carry out a study that deals with consumer’s perception about fruit beverages with marketing mix elements and their influences on the consumer’s desire to buy fruit beverages. Consumers often decide buying a product based on their perception towards the product. According to Mowen and Minor (1999) perception is a stage where consumers get exposure, attention and comprehension in an information process. According to Sumarwan (2011) how a consumer sees reality beyond himself or his surrounding world is what is called as consumer’s perception. Understanding consumer’s perception is important for a marketer and producer. In the decision-making model, Schiffman and Kanuk (2000) say that the consumer’s external factor also plays a role to influence the consumer in making decisions, one of which is marketing mix elements. The meaning of marketing mix according to Kotler (2003) is a set of constituents used by a company continuously to reach its marketing goals in the target markets. The concept of marketing mix consists of four P elements, namely product, price, place and promotion. These four marketing mix elements are aimed to market products, seen from the producer’s point of view. As for service marketing such as in a restaurant, Booms and Bitner in Indrajaya (2006) suggest to add three other P elements in the marketing mix, namely people (participants), physical evidence and process. Some researchers on marketing mix related to its implications on the buyers, sale improvement and marketing strategies have been carried out previously (Senjaya, 2014; Aritonang, 2014; Marwa, 2014; Susanti, 2013, Widowati, 2010; Rachmawati, 2011; Lin, 2011).
_______________________ WORLD TECHNOLOGIES _______________________
128
ENTREPRENEURSHIP MANAGEMENT
The objective of this research is to analyze marketing mix factors that can influence the desire to buy fruit beverages and the marketing strategies based on the marketing mix elements. The scope of the research is limited to several things, namely: 1) fruit-beverage-based restaurants are those that use fruit ice as its strength/superiority to other restaurants; 2) fruit beverages are those that use fruits as their main ingredients that can be combined with various fruits and other supplements such as milk, syrup, or other food ingredients. Fruit ice drinks do not include fruit juice that only serves its extract; 3) fruit ice consumers are limited to the people in Bogor City and tourists that come to Bogor City.
METHOD The research on the fruit ice consumer’s behavior was carried out in Bogor City for two months, from July to August 2015. The research location was chosen purposively in fruit-beverage-based restaurants in Bogor City and other strategic locations, such as malls, universities and housing complex in Bogor City. The research was carried out using a descriptive method a descriptive method. Data collection was carried out using a direct interview and survey with questionnaire instrument.
Sample taking was carried out randomly or nonprobability sample, with a convenience sampling method. The number of respondents was 100 people from Bogor City population, calculated using Slovin formula. The respondents chosen were the fruit ice consumers in fruit-beverage-based restaurants and some other strategic locations such as malls and campuses in Bogor. In this research marketing mix elements (product, price, place, promotion, physical evidence, people and process) become independent variables, while the consumer behavior is the dependent variable. Questions are given in the form of Likert scale with 1–5 intervals. In the validity and reliability tests presented completely in Table 1, all the indicators of each variable has an r calculation > r tabel. On the other hand the alpha (α) value is bigger than the determined one (0,7), so that it can be concluded that the questionnaire is valid and reliable as a research measurement. The analysis used is a descriptive analysis and to find out the purchasing behavior discriminant analysis is used. Processing and analyzing data use a Microsoft Excel program and SPSS 16. The conceptual analysis framework of the research is presented in Figure 1.
Table 1. Results of validity and reliability tests of marketing mix elements Marketing mix Product
Price Place Promotion Physical evidence Process People
Attribute Variety of fruit Benefits of fruit Fruit giving freshness Product performance Information on fruit content Fruit ice of healthy lifestyle Care for local fruit Choosing local fruit Price affects purchasing Location affects visit Choosing eating location in food court Promotion affects purchasing Interior affects visit Service affects visit Choosing one’s own fruit ice combination Employees; knowledge Wearing employees’ uniform
r-calculation 0,657 0,574 0,532 0,562 0,372 0,362 0,363 0,374 0,592 0,694 0,402 0,555 0,623 0,528 0,487 0,684 0,436
Alpha (α)
0,879
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX FACTORS THAT INFLUENCE THE DESIRE TO PURCHASE FRUIT BEVERAGES...
Development of fruit ice-based restaurants in Bogor City
Consumer behavior towards fruit beverages
Purchasing behavior of fruit beverages
Perception towards marketing mix
Discriminant analysis and descriptive analysiseskriptif
Implications of marketing strategy
Figure 1. The conceptual framework
RESULTS Perception of Marketing Mix Elements Elements included in the 4P marketing mix, namely product, price, place, promotion and also 3P elements, namely physical evidence, process, people, have been raised in this research to be asked to respondents. Some additional questions related to development of fruitbeverage-based restaurants are also asked to consumers. Questions are proposed in the form of statements with Likert scale evaluation (5 scales), namely Agree very much (SS), Agree (S), Neutral (N), Not Agree (TS) and do not agree very much (STS); they are then summed to get the frequent percentage of each evaluation. The main objective of this discussion is to be able to develop business and marketing strategy of fruit-beveragebased restaurants in Bogor City based on the marketing mix principles. In developing a business, products are important elements that need to be considered. However, one product has its own superiority compared to other products of the same type, so that being accepted well in the market is the most important thing to start a business. Fruit beverages have been developed well in Bogor City. Innovation and novelty of the beverage product is very important to present uniqueness of the product so that it can be accepted well by markets. From the research results presented in Table 2, it can be seen that majority respondents like fruit ice that has varied
129
fruits. Respondents are also aware of getting the benefit of eating fruit ice. This certainly affects the continuity of purchasing. In addition, respondents are also interested in the contents of the fruit in the beverage they buy. This can be developed to attract consumers to buy fruit ice product. Furthermore, although it is not determined by purchasing, types of fruit that respondents like as the main ingredients of fruit ice are durians, mangos, avocadoes, and strawberries. Besides, respondents also say that product appearance also affects their likeness to fruit beverages. Determining price on one product can be influenced by segmentation and positioning of the product itself. One product can be sold with higher prices from other similar products if it has an added-value which then will determine the target market. In this research, a question on the ideal price of fruit beverages expected by the consumers is also proposed. Respondents say that the ideal price of fruit beverages is between Rp10.000 and Rp15.000 (Table 3). The result is a price based on the consumers’ expectation. However, determining the price of fruit beverages must also pay attention to production cost from upstream to downstream lines. In this case it is necessary to cooperate with fruit farmers around Bogor area, so that it is expected that it can reduce the production cost. A good cooperation with producers is expected to be able to reach a reasonable price suitable to the consumers’ expectation. Respondents also say that the price of fruit beverages will affect the consumers’ decision to buy them (Table 4). In developing business of food or beverage-base, location is one of the most determining factors. A strategic and crowded location that is visited by consumers is on a business location that is close to some similar businesses can become its own market that makes it easy for consumers to look for whatever they need. In food and beverage business, food court or a centralized food place is a facility for consumers to get what they want. Table 5 shows information that restaurant locations affect the frequency of visits by the consumers of fruit beverages. In addition, consumers also like to go a place that is centralized when deciding to choose a place to eat, such as food court or a place with many choices of eating sites. The next marketing mix element is promotion. By preparing an appropriate promotion, a business can develop well although the product offered does not have specialty from other similar products, or maybe its location is not strategic. Promotion can also give an added value of a product and give its own image so that
_______________________ WORLD TECHNOLOGIES _______________________
130
ENTREPRENEURSHIP MANAGEMENT
the product becomes superior compared to other similar products. Based on the research results, a promotion form that is preferred by majority of respondents of fruit beverages is reduced price or discount (Table 7). The promotion media that is preferred by respondents of fruit beverages is social media (Table 8). According to Siswanto (2013), social media can give competitive superiority to Small-Middle Business (UKM). If it is
used optimally, social media can create a brand image for the UKM and give satisfaction that can implicate to loyalties. Companies can choose any social media that is more effective to use for its own product promotion and business. However, most UKMs use more than one social media in marketing their products. The aim is their companies will get more consumers unlimited to specific community or social media users.
Table 2. Perception of Product element Statements The more varied types of fruit in the fruit ice, the tastier Benefits of fruits in fruit beverages affect continuity of fruit ice purchasing Fruits, in fruit beverages, give freshness Fruit ice appearance affects one’s likeness to fruit beverages You will become interested in consuming fruit ice if there is information of nutrient content of the fruits in fruit beverages Consuming fruit beverages shows healthy lifestyle You care for fruit ice if it is of local product In the fruit ice beverage, you tend to choose local fruits rather than imported ones
SS 29 23 47 36 28
Percentage (%); n = 100 S N TS STS 36 20 13 2 44 22 10 1 48 3 2 50 9 5 47 14 11 -
10 19 21
36 37 20
37 31 43
15 13 15
2 1
Table 3. Ideal price for fruit beverages Ideal price of fruit beverages < Rp10.000 Rp10.000 – Rp15.000 Rp15.000 – Rp20.000 > Rp20.000
Percentage (n = 100) 14% 56% 21% 9%
Table 4. Perception of price element Statements
SS 26
Fruit ice beverage price affects your purchasing decision
Percentage (%); n = 100 S N TS STS 44 21 9 -
Table 5. Perception of location element Statements Restaurant locations affect the frequency of your visits In determining eating sites, you prefer to go to a food court or a place which can provide many choices of eating sites
Percentage (%); n = 100 SS S N TS STS 27 54 16 3 18 41 30 10 1
Table 6. Perception of promotion element Percentage (%); n = 100 SS S N TS STS 18 32 32 18 -
Statements Promotion affects you to buy fruit beverages.
Table 7. Promotion form preferred by fruit ice consumers Attractive promotion form Reduced price Instant prize Direct promotion Purchasing promotion
Percentage (n = 100) 48% 5% 3% 44%
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX FACTORS THAT INFLUENCE THE DESIRE TO PURCHASE FRUIT BEVERAGES...
131
Table 8. Promotion media preferred by fruit ice consumers Desired promotion Newspapers Pamphlets (flyer) Social media Direct promotion when purchasing Others
Physical evidence is an evidence that supports service marketing. Research results show that physical evidence a restaurant influences the frequency of consumer’s visit to the restaurant (Table 9). According to Felix (2013) interior of a restaurant needs a typical characteristic or design. This characteristic will later on create an atmosphere that gives the consumers their own experience. According to Ma’ruf in Andreani et al. (2013) differentiation and innovative marketing efforts can be used to improve competitive superiority. One of the innovative marketing efforts is creativity in making a unique restaurant’s atmosphere. Respondents themselves like natural interior for a restaurant of fruit ice beverage-base, which is also completed with supporting facilities, such as toilet, parking lot, and wifi/internet (Table 10 and Table 11). Nevertheless, the more complete the facilities are in one service business, the more consumers will come. Another marketing mix element is people or participant, that is any aspects that are related to a personnel expertise that is involved in the business. In a restaurant business, employees that provide the service directly or indirectly to the consumers are participants that belong to this element. Table 12 presents information that employees; knowledge about products they sell is very important. Therefore, it is important to conduct a good and appropriate training for employees, especially those that directly deal with the customers. Furthermore, respondents say that wearing uniform is also necessary for the employees. The last marketing mix element is process. Process is an activity that shows how service is delivered to consumers. In this case, process in a restaurant is related to the service given during the process of purchasing foods and beverages. A service element is closely related to the participant element. Table 13 shows that majority of respondents say that a restaurant service affects the frequency of customers’ visit. Furthermore, respondents are interested in facilities of making their own fruit combination in a fruit-beverage-based restaurant. In this case, respondents have a freedom to choose the fruit that they are going to eat based on their preference. Therefore, it is important to have a system
Persentase (n = 100) 19% 40% 40% 1%
that is well integrated to support the service process and to implement an innovation to be developed later. Factors Affecting the Desire to Purchase Fruit beverages In this analysis, respondents of fruit beverages are classified into two groups, namely those who want to buy fruit beverages and those who don’t. Both groups are dependent variables. The independent variables are marketing mix elements, namely product, price, place, promotion, physical evidence, process and people. Independent variables that distinguish consumer behavior are those that have Sig. value < 0,05. Based on the results of the discriminant analysis presented in Table 14, it shows that price element has a Sig. value < 0,05, that is 0,07 and physical evidence has Sig. value 0,048. This means that there is a difference between the group that wants to buy fruit beverages and the one that does not, which is influenced by price element and physical evidence element. It can also be said that respondents that buy fruit beverages and those that don’t are affected by their behavior towards the price of fruit beverages and the physical evidence of the restaurant. The results of analysis show that price has more influence on the customer’s decision making than physical evidence. The analysis also shows that there are some determining factors of discriminant function that are presented in Table 15, where the discriminant function formed is as follows: D = -3,339 + 0,619Physical + 0,899Price The function is to find out consumers that are divided into two groups, namely those who buy fruit beverages and those who don’t, each of which can only be put into one group. However, the function cannot determine whether the consumers belong to the group of those who buy fruit beverages or not. Therefore, the function must be followed up with calculating the limit value (cut-off). Calculation to get a limit value in order to distinguish both groups is by using the following formula:
_______________________ WORLD TECHNOLOGIES _______________________
132
ENTREPRENEURSHIP MANAGEMENT
n1 : number of consumers that don’t buy fruit beverages, namely 35 consumers. Notes: μ0 : group centroid for group 0 (those who buy fruit beverages) μ1 : group centroid for group1 (those who don’t buy fruit beverages) n0 : number of consumers that buy fruit beverages, namely 64 consumers
Based on the formula, it can be concluded that the calculation result of limit value or cut-off is -0,18624. This result means that if discriminant value (D) is bigger than -0,18624 the consumers belong to the group that will buy fruit beverages. On the other hand, if the discriminant value (D) is smaller than -0,18624 the consumers belong to the group that will not buy fruit beverages.
Table 9. Perception of physical evidence element Statements
SS 16
Interior of a restaurant affects the frequency of your visit
Percentage (%); n = 100 S N TS STS 45 32 7 -
Table 10. Concept of a restaurant’s interior that is based on fruit beverages Restaurant interior suitable with a restaurant ior restoran that is based on fruit beverages Ethnic/traditional Modern Natural Minimalist Fruit-concept Others
Percentage (n = 100) 12% 7% 37% 28% 15% 1%
Table 11. Facilities desired by consumers Facilities desired Toilet Parking lot Wifi/internet Payment by credit (debit/credit) Delivery service Others
Number of respondents 71 60 61 34 39 8
Percentage (%) 21.90 22.26 12.4 14.23 2.92 26.27
Table 12. Perception of participant element Statements Employees’ knowledge about products they sell in a fruit-beverage-based restaurant is very important Wearing uniform is very important for employees working in a fruit-beverage-based restaurant.
SS 25 15
Percentage (%); n = 100 S N TS STS 56 12 7 36
36
13
-
Table 13. Perception of process element Statements Service in a restaurant influences the frequency of your visit. You will be interested in the facilities of ‘choosing your own fruit ice combination’ in a fruit-beverage-based restaurant.
Percentage (%); n = 100 SS S N TS STS 19 45 24 12 37 42 17 4 -
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX FACTORS THAT INFLUENCE THE DESIRE TO PURCHASE FRUIT BEVERAGES...
133
Table 14. Test results of independent variables Variable Product Price Place Promotion Physical Process People
Wilks' Lambda 1,000 0,927 0,973 0,998 0,961 0,997 0,985
F 0,044 7,697 2,696 0,176 4,021 0,326 1,505
Table 15. The framer of discriminant function Variable Physical Price (Constant)
Function 1 0,619 0,899 -3,339
From the results of discriminant test, we can get output classification results in which the original grouped cases correctly classified value gets as much as 60%, which means that as much as 60% data has been classified well. Furthermore, the results of cross-validated grouped cases correctly classified that function to reduce bias in the previous classification process show as much as 60% or the same as the previous results. Both results are more than 50%, which means that the model or function of discriminant has been formed is feasible to distinguish both consumer groups, namely those that want to buy fruit beverages and those who don’t. Based on the results of discriminant analysis it is found out that price and physical evidence factors affect the desire to purchase fruit beverages. In this case consumers of fruit beverages make a consideration of buying that is affected by product price and its physical evidence of the fruit-beverage-based restaurants in Bogor City. The earlier researches show that there is a similarity about price factor that affects buying, namely Senjaya (2014) on Japanese food in Hayashi Teppan, Aritonang (2014) on cattle feed (soybean oilcake), and Susanti (2003) on toothpaste ‘pepsodent’. Physical evidence factor is known to influence life insurance purchase in the research carried out by Marwa (2014). Strategic Implications of Marketing Fruit beverages in Fruit Ice beverage-based Restaurants Based on the research results carried out, it is found out that price and physical evidence factors influence the
df1 1 1 1 1 1 1 1
df2 98 98 98 98 98 98 98
Sig. 0,835 0,007 0,104 0,676 0,048 0,569 0,223
customers’ desire to buy fruit beverages in Bogor City. Consumers want the price of fruit beverages as they expect. In this research consumers consider a reasonable price for fruit beverages is between Rp10.000 and Rp15.000. Nevertheless, determining the price must consider the costs that must be borne in the production process from the upstream to downstream. Choosing the fruits that will be used is also important. Fruits that are easily produced and obtained will have lower price, compared to those that are difficult to produce and get. Therefore, it is necessary to have a good cooperation with local fruit farmers surrounding Bogor area. This can reduce production cost so that it is expected that producers of fruit beverages can set the price as the consumers expect. A marketing mix element that also affects the desire to buy fruit beverages is physical evidence. A physical evidence of a restaurant includes the building, interior design, equipment and facilities of the restaurant. Physical evidence of a restaurant gives the consumers comfort. Furthermore, a restaurant that gives something special in its concept will leave a different impression to the consumers. That will affect the consumers’ intention to buy fruit beverages in Bogor City. The research results show that consumers of fruit beverages like a minimalist natural interior concept in a fruitbeverage-based restaurant. Besides, consumers expect there are complete facilities, in which the priorities are toilet, parking lot, and internet (wifi). Other marketing mix elements, although they do not influence the customers’ desire to purchase fruit beverages, the information that we get can be used as a supporting material for the marketing strategies of a fruit-beverage-based restaurant. The implications of marketing strategies are presented in Table 16.
_______________________ WORLD TECHNOLOGIES _______________________
134
ENTREPRENEURSHIP MANAGEMENT
Table 16. Implications of marketing strategies based on marketing mix elements Attributes Product
→ →
Place
→
Promotion People
→ →
Process
→ →
Managerial implications Creating new combinations of fruits based on the consumers’ preference Creating innovation by choosing their own fruit combinations and preparing information on the nutrient content of the fruits they choose Choosing locations of restaurants by considering their surrounding that has similar activities, such as food court, or specific places for eating Developing promotion through social media Supporting training carried out well and appropriately by evaluating continuously all the employees so that their service quality can always be maintained Wearing informal uniform Using well integrated system to support the service process and implement innovation to be developed
CONCLUSIONS AND RECOMMENDATIONS
REFERENCES
Conclusions
Andreani F, Kristanti M, Yapola A. 2013. Pengaruh store layout, interior display, human variable terhadap customer shopping orientation di restoran dewandaru surabaya. JMK. 15(1): 65– 74. http://dx.doi.org/10.9744/jmk.15.1.65-74. Aritonang PA. 2014. Analisis pengaruh bauran pemasaran terhadap keputusan pembelian bahan baku bungkil kedelai pada industri pakan ternak di Indonesia [tesis]. Bogor: Institut Pertanian Bogor. Dudesy RP. 2014. Analisis kepuasan konsumen dan sensitivitas harga di Sop Duren Lodaya Coffee and Resto [skripsi]. Bogor: Institut Pertanian Bogor. Felix T, Santosa A, Utami HS. 2013. Perancangan interior restoran dengan pendekatan ekologis di Surabaya. J Intra 1(1): 1–8. Garcia-Alonso M, Pascual-Teresa S, Santos-Buelga C, Rivas-Gonzalo JC. 2004. Evaluation of the antioxidant properties of fruits. Food Chemistry. 84: 13–18. http://dx.doi.org/10.1016/S03088146(03)00160-2 Ginting SU. 2011. Pola makanan dan minuman menuju budaya hidup sehat. Jurnal Ilmu Keolahragaan 9(2): 52–66. Indrajaya B. 2006. Analisis preferensi konsumen terhadap restoran penyaji makanan hasil laut (Studi kasus pada Restoran Seafood Rasane) [tesis]. Bogor: Institut Pertanian Bogor. [Kompas] Kompas.com. 2014. Bima Arya berharap PHRI motor pariwisata Kota Bogor.http://travel. kompas.com/read/2014/02/22/1335253/Bima. Arya.Berharap.PHRI.Motor.Pariwisata.Kota. Bogor.[8 Juni 2015]. Kotler P. 2003. Marketing Management. New Jersey: Prentice Hall International. 12nd Ed.
Conclusion of the research results show that price and physical evidence factors influence consumers to buy fruit beverages. The marketing strategies of fruit beverages must pay attention to the consumers’ consideration on the product price and the restaurant’s physical evidence. Other marketing mix elements do not influence the consumers’ desire to buy fruit beverages; however, information that we can get can be used to support the marketing strategies of the product. One of them is innovation development that is preferred by the consumers is choosing their fruit combinations for their fruit beverages. This innovation is recommended to be supported with social media development as its promotion media. Recommendations Fruit beverages are a type of drink that has long been known by Indonesian people. Nevertheless, some business development by adding value to fruit ice beverage products has got good responses from the people in Bogor City, and this business has developed well as an innovative business. From the research that has been carried out, it is suggested that the restaurant owners of fruit beverages in Bogor City should pay attention to price and physical evidence factors because both of them influence the customers’ desire to buy the product. The managerial implications based on the research results can also be used as additional marketing strategies in developing business in fruit beverage-based restaurants.
_______________________ WORLD TECHNOLOGIES _______________________
MARKETING MIX FACTORS THAT INFLUENCE THE DESIRE TO PURCHASE FRUIT BEVERAGES...
Lin SM. 2011. Marketing Mix (7P) and Performance Assesment of Western Fast Food Industry in Taiwan: An Application by Associating DEMATEL and ANP. African Journal of Business Management 5(25): 10634–10644. Marwa S. 2014. Pengaruh bauran pemasaran jasa terhadap keputusan pembelian asuransi jiwa individu di Kota Bogor [tesis]. Bogor: Institut Pertanian Bogor. Mowen JC, M Minor. 1999. Consumer Behaviour. New Jersey : Prentice Hall. Nainggolan O, Adimunca C. 2005. Diet Sehat Dengan Serat. Cermin Dunia Kedokteran No. 147. Jakarta: Departemen Kesehatan RI. Pardede E. 2013. Tinjauan komposisi kimia buah dan sayur: Peranan sebagai nutrisi dan kaitannya dengan teknologi pengawetan dan pengolahan. J. VISI. 21 (3): 1–16. Piironen V, Toivo J, Puupponen-Pimia R, Lampi A. 2003. Plant terols in vegetables, fruits and berries. J. Sci. Food Agric. 83: 330–337. http:// dx.doi.org/10.1002/jsfa.1316 Rachmawati R. 2011. Peranan bauran pemasaran (marketing mix) terhadap peningkatan penjualan (sebuah kajian terhadap bisnis restoran). Jurnal Kompetensi Teknik 2(2): 143–150. Ria R. 2014. Analisis faktor-faktor yang memengaruhi preferensi konsumen terhadap buah lokal [tesis]. Bogor: Institut Pertanian Bogor. Rochani HTTD. 2007. Analisis Preferensi Konsumen Terhadap Atribut Sop Buah Pak Ewok (Kasus di Bogor, Jawa Barat) [skripsi]. Bogor: Institut Pertanian Bogor.
135
Santoso A. 2011. Serat pangan (Dietary Fiber) dan manfaatnya bagi kesehatan. Magistra 75(23): 35–40. Schiffman GL, Kanuk LL. 2000. Perilaku Konsumen. Jakarta: Indeks. Senjaya HG. 2014. Pengaruh Bauran Pemasaran Terhadap Keputusan Pembelian Masakan Jepang di Hayashi Teppan (Survey Terhadap Konsumen Hayashi Teppan di Food Court BEC). E-Journal Graduate Unpar 1(2): 199–210. Siswanto T. 2013. Optomalisasi sosial media sebagai media pemasaran usaha kecil menengah. Jurnal Liquidity 2(1): 80–86. Sumarwan U. 2011. Perilaku Konsumen, Teori dan Penerapannya dalam Pemasaran. Jakarta: Penerbit Ghalia Indonesia. Susanti. 2013. Analisis faktor bauran pemasaran yang memengaruhi keputusan konsumen dalam melakukan pembelian pasta gigi pepsodent (Studi Kasus di Wilayah Cengkareng). Jurnal Akuntansi dan Manajemen Esa Unggul 1(1): 143–149. Terry P, Terry JB, Wolk A. 2001. Fruit and vegetable consumption in the prevention of cancer: an update. Journal Internal Medicine. 250: 280–290. http://dx.doi.org/10.1046/j.13652796.2001.00886.x Widowati M. 2010. Pengaruh Harga, Promosi dan Merek Terhadap Penjualan Barang Pharmasi di PT. Anugrah Pharmindo Lestari. Fokus Ekonomi 5(1): 55–69. [Wikipedia] Wikipedia. 2014. Es Teler 77. http:// id.wikipedia.org/wiki/Es_Teler_77.[5Juni 2015].
_______________________ WORLD TECHNOLOGIES _______________________
15
REDUCTION OF bullwhip EFFECT ON COMMODITY SUPPLY CHAIN IN FRESH FRUITS AND VEGETABLES WHOLESALE LotteMart BOGOR Bimahri Qaulan Tsaqiela*)1, Yandra Arkeman**), and Bunasor Sanim***) Business School, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Agroindustrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University PO BOX 220, Campus IPB Dramaga, Bogor 16602 ***) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 *)
ABSTRACT The purpose of this study was: (1) To identify supply chain structure of fresh fruit and vegetables in LotteMart Wholesale Bogor, (2) Analyze the value of bullwhip effect in the supply chain of fresh fruit and vegetables in LotteMart Wholesale Bogor. (3) Analyze the factors that led to the bullwhip effect in the supply chain of fresh fruit and vegetables at LotteMart Wholesale Bogor, (4) Reduce the bullwhip effect in the supply chain of fresh fruit and vegetables in LotteMart Wholesale Bogor. Method that used in this research are bullwhip effect formula to analyze the value of bullwhip effect and simulation to reduce bullwhip effect with software Arena Rockwell 14.0. The results showed that fresh fruit and vegetables in LotteMart Wholesale Bogor experienced bullwhip effect and also different scenario of time between arivals distribution able to reduce bullwhip effect value in supply chain. Keywords: supply chain, bullwhip effect, arena simulation, LotteMart
ABSTRAK Tujuan dari penelitian ini adalah 1) mengidentifikasi struktur rantai pasok buah dan sayuran segar di LotteMart Wholesale Bogor, 2) menganalisis nilai bullwhip effect dalam rantai pasok buah dan sayuran segar di LotteMart Wholesale Bogor, 3) menganalisis faktor-faktor yang menyebabkan efek bullwhip dalam rantai pasok buah dan sayuran segar di LotteMart Wholesale Bogor, 4) mengurangi bullwhip effect pada rantai pasok buah dan sayuran segar di LotteMart Wholesale Bogor. Metode yang digunakan dalam penelitian ini adalah rumus bullwhip effect untuk menganalisis nilai bullwhip effect dan simulasi untuk mengurangi bullwhip effect dengan Arena software Rockwell 14.0. Hasil penelitian menunjukkan bahwa buah-buahan segar dan sayuran di LotteMart Wholesale Bogor mengalami bullwhip effect dan skenario yang berbeda dari distribusi waktu antar kedatangan dapat mengurangi nilai bullwhip effect dalam rantai pasok. Kata kunci: rantai pasok, bullwhip effect, simulasi arena, LotteMart 1
Corresponding author: Email:
[email protected]
INTRODUCTION Horticulture belongs to conmmercial commodities of high value. The sub-sector horticulture contribution to Gross Domestic Product (GDP) value from year to year tend to increase. According to the Statistic Center Bureau in 2005 the horticulture GDP increased from Rp61,79 billion to Rp89,057 billion in 2009. The increasing income per capita in Indonesia has caused a change in Indonesian people consumption pattern from
the main staple to a global trend such as fresh fruits and vegetables, fish, meat, milk product, and processed foods (Chowdhury, 2004). This change of consumption pattern has given a positive impact on the development of fresh fruits and vegetables. The characteristics of fresh fruits and vegetable comodities are perishable, seasonal, and voluminous. This condition shows that fresh fruits and vegetables need supply chain from onfarm to off-farm that is well and efficiently-integrated. In the supply chain, activities begin with the provision
_______________________ WORLD TECHNOLOGIES _______________________
REDUCTION OF BULLWHIP EFFECT ON COMMODITY SUPPLY CHAIN IN FRESH FRUITS...
of saprodi and alsintan, from the cultivation process to distribution and product marketing. Fresh fruits and vegetables are produced by farmers as the producers on farm and then distributed to modern markets. Modern markets appear to answer the people’s needs because of the change in demand anf lifestyle pattern. The people’s demand is more complex, since it not only emphasizes on the quality of the product, convenience, and higher value that they can get when the buy the product also become very important. Improved income per capita also happens to Bogor City, where the increase will affect the increase of the people’s purchasing power. PDRB per capita based on prices in Bogor City that was effective in 2013 was Rp19.283.951,17 or there was a positive change as much as 9,92% compared to PDRB per capita in 2012 (BPS Kota Bogor, 2014). In addition to that, Bogor City is located near the Capital City of West Java, Bandung. Its strategic location is potential to expand development, economic growth, service, national industrial center, transportation, communication and tourism (the City of Bogor). This is a driving factor for modern market growth that is rapidly developed in Bogor City. LotteMart Wholesale Bogor is one of the modern markets in the form of wholesale that has operated for two years. This wholesaler operates with applying a buying concept that emphasizes on a low price. LotteMart Wholesale provides traders’ needs (modern and traditional retailers) and end users. This is a unique concept for a modern market of wholesale-form. In general, a wholesale serves the retailers’ needs. The products they buy are then resold to other consumers. The flow of products, information, and finance happens in the supply chain of each level in LotteMart Wholesale in Bogor. The flow from the farmers to wholesalers and vice versa must be continuous. If there is a lack in the supply chain, it will become inefficient. Problem that often occurs in the supply chain that makes the supply chain performance is not efficient and optimal is distortion of information. Distortion of information happens because of the lack in coordination among the parties involved in the supply chain. Distortion of information will cause a demand pattern becomes fluctuative towards the on-farm supplier which is called a bullwhip effect. Bullwhip effect is a phenomenon in which there is an increase of fluctuation or variability of demand from the on-farm to the off-farm in one supply chain (Pujawan dan Mahendrawathi, 2010). The phenomenon is called a bullwhip effect because it is a
137
form of demand curve for the suppliers which is like a whip that expresses fluctuation, while the demand curve for cunsumers is more flat. LotteMart Wholesale sometimes experience problems in meeting the demand for fresh fruits and vegetables. Season and fluctuation of price are some influencing factors in fulfilling the demand. Fresh fruits and vegetables are seasnal, so that during rainy season, for example, the quantity and quality of harvest will decrease. Therefore, the quantity of supply that is delivered by wholesalers will also decrease. This will certainly affect the sale to customers. Besides, the coordination between suppliers and wholesalers is very low, so that the quantity and quality that is delivered is not suitable with the quantity and quality that has been set by the wholesalers. Lack of supply is one of the causes of a bullwhip effect. The impact of this bullwhip effect is inefficiency in the supply chain because the doers in the supply chain have misunderstood the signal. Furthermore, another impact of a bullwhip effect is the increase of production cost, storage cost, transportation cost, delivery and acceptance cost, additional lead time, decrease of product and at last decrease in profit (Chopra dan Meindl, 2013). For those reasons, it is important to study a Bullwhip Effect on the supply chain of fresh fruits and vegetables in modern markets. The analysis of the Bullwhip Effect in this study will use the Bullwhip Effect formula to find out the amplification of demand variabilities happening in the supply chain. METHOD The research was carried out in LotteMart wholesale Bogor City. This is because LotteMart wholesale serves sellers and end users. Data collection from the field were carried out in February and March 2015. This research is a case study on the supply chain in a modern market LotteMart Wholesale Bogor on the commodities of fresh fruits and vegetables. LotteMart Wholesale Bogor was chosen because of its unique concept, namely a modern market in the form of wholesale, which has been established for 2 years, so that it is potential to experience inefficiency in the supply chain; besides, Bogor City is a supporting town for the capital city whose economic growth has developed very rapidly.
_______________________ WORLD TECHNOLOGIES _______________________
138
ENTREPRENEURSHIP MANAGEMENT
Fresh fruits and vegetables that have been developed inlcude harumanis manggo, Red Globe USA grapes, seedless red melon, imported carrots, shallots and red chillies. The research focuses more on the information it is trying to get in order to know a problem that exists, so that appropriate information can be gained, and the number of samples taken is not an important aspect. Data that are used in this research include primary data and secondary data. The primary data used in this research are the chain flow of fresh fruits and vegetables and a demand fulfilment system, whereas the secondary data used in this research cover data about order from wholesaler to buyers and demand from customers to wholesalers. The research methods that are used in this research are qualitative method, quantitative method and simulation. The qualitative descriptive method is used to explain a description of fresh fruits and vegetable supply in LotteMart Wholesale Bogor and to analyze factors that cause a bullwhip effect. The major influencing factors are decentralized demand forecast updating, irregular order matching, price fluctuation, rationing and shortage gaming (Lee et al.1997; Pujawan and Mahendrawathi, 2010). Quantitavie methos are used to analyze a bullwhip effect value on the freh fruits and vegetable supply chain in LotteMart Wholesale Bogor. The formula used to calculate the bullwhip effect value is as follows:
AVG Xi n
: Average : Number of raw materials order : Ordering period
If the value of BE>1, it shows that there is a demand expansion on the product. On the other hand, if BE≤1, it shows that rarefaction of demand pattern shows on the related party. Simulation is used to reduce a bullwhip effect after carrying out calculation on the bullwhip effect value and analyze the causing factors. The aim of this simulation model was to demonstrate the benefits of imrpoving the flexibility levels of of fresh fruits and vegetable supply chain, in relation to the reduction of bullwhip effect (Radulescu and Ciocardia, 2009). Liong and Loo (2009) explain that in the arena, a simulation model can be established by placing moduls simultaneously that have been set up previously, which is a process or logics. Data within the arival time of the entities use primary data which have been processed using an input analyzer. Later on, it is used within the arrival time of the Arena simulation. After the simulation output is obtained, the results will be carried out using a bullwhip effect formula again and compared with the results of a bullwhip effect that has been previously counted. The research frame of thought is explained in Figure 1. RESULT Structure of Supply Chain in LotteMart Wholesale Bogor
Description: BE CV order
CV Demand
STD
: Bullwhip Effect : the variants’ coefficient value that is obtained from calculation of the number of wholesaler’s order : the variants’ coefficient value that is obtained from calculation of the number of consumers’ demand : Standard deviation
Supply chain in LotteMart Wholesale Bogor consists of several components that are integrated. The components are suppliers, buyer , distributor, wholesaler (grocers), and customer. The headquarter of LotteMart Indonesia is called a buyer because it purchases products to suppliers, whereas LDC (Lotte Distribution Center) plays a role as a distributor. The product to be distributed to LotteMart all over Indonesia must first be collected in LDC that is located in Pasar Rebo. After that, the products will be sent to LotteMart Wholesale as a wholesaler which will carry ot selling, namely the end-users, retailers, traders, and HOREKA (Hotel, Restaurant, Catering).
_______________________ WORLD TECHNOLOGIES _______________________
REDUCTION OF BULLWHIP EFFECT ON COMMODITY SUPPLY CHAIN IN FRESH FRUITS...
139
Fresh fruits and vegetable commodities have high economic value. Commodity characteristics are perishable, seasonal, and voluminous
Supplier
Demand Order
Buyer
Information flowflowasi
Demand Order
Modern market
Information flowflowasi
Gap (Information distortion)
Increased variabilities of demand form offfarm to on-farm (Bullwhip effect) Measuring expansion of demand variability (Bullwhip effect) Factors causing a Bullwhip Effect Reduction of Bullwhip Effect
Managerial implications
Figure 1. Frame of thought of the research In each supply chain there is a flow of product, information and financce from the upstream to downstream of vice versa. The flow of productm informationm and finance in the LotteMart Wholesale Bogor chain started from suppliers to customers, which can be seen in Figure 2. The structure of supply chain of LotteMart Wholesale starts from suppliers that are the suppliers of fresh products and proccessed products to LotteMart Wholesale network all over Indonesia. the suppliers are LotteMart partners that are bound with a conract. The products to be delivered must meet the standard and quality set in the contract. If the suppliers have got he informaion via email about he order from the buyers, the suppliers will soon deliver the products to the wholesaler. The wholesaler, however, has informed the order of products needed by the buyers. Fresh fruits and vegetables belong to the category fresh food so that the products must be first collected by the distributors
(LDC) before they are distributed to wholesaler. LDC only accommodate local fruits and vegetables, while imported fruits and vegetables are sent directly from the supppliers to he wholesaler. Bullwhip Effect analysis of Fresh Fruits and Vegatebles The analysis of bullwhip effect was carried out to find out the variability expansion of demand for fresh fruits and vegetables in LotteMart Wholesale Bogor. The analysis used data for order and demand of some freh fruits and vegetables in the last three months of the year 2014. The fresh fruits chosen are red Globe grapes from USA, harumanis manggoes, and seedless red melon. As for the fresh vegetables, those that are chosen include shallots, red chillies and imported carrots. Some fresh fruits and vegetables are chosen because they belong to the group of the highest sale level in LotteMart Wholesale.
_______________________ WORLD TECHNOLOGIES _______________________
140
ENTREPRENEURSHIP MANAGEMENT
Suppliers
Buyers (Headquarter of LotteMart Wholesale)
Distributors LDC (Lotte Distribution Center)
Wholesalers (LotteMart Wholesale Bogor)
Customers (end user, retailer, trader, HOREKA)
Notes:
= product flow = financial flow = information flow
Figure 2. The supply chain of LotteMart Wholesale Bogor Calculation of order and demand data was carried out in sequence from the AVG (average) calculation until it produced BE (Bullwhip effect) using Ms. Excel. The results of the calculation that have been carried out with Ms Excel are prresented in Table 1 and Table 2. The calculation results show the bullwhip effect value of fresh fruits for the period of October-November 2014. The BE value for the comodity of Red Globe grapes of USA was 1,31. the value indicates that the demand variability increased or expanded 1,31 times. On the comodity of harumanis mangoes the BE value was 2,94, which means that the demand variability expanded 2,94 times. On the commodity of red watermelon , the BE vale was was 2,91, which means that the demand variability expanded 2,91 times. The calculation results indicates that the three commodities experienced the bullwhip effect. The calculation results show the calculation of the bullwhip effect value for the period of OctoberNovember 2014, the BE value on the shallot commodity was 1,98. the value indicates that the demand variability underwent expansion 1,98 times. The value indicated that the demand variability increased or expanded 1,98 times. As for the red chily commodity, the BE value was
0,98, which means that in this commodity there was no demand variability expansion. On the carrot commodity the BE value was 1,04 which means that the demand variability increased 1,04 times. The calculation results showed that shallot and improted carrot commdities experienced the bullwhip effect, while red chilies did not experience the bullwhip effect. The bullwhip effect value of local commodities tend to be higher than import commodities. Local commodities got basic problems in the upstream, i.e. the shortage of qualified seeds, lack of incentive the fresh fruit and vegetable farmers obtained, and incapable logistic infrastructure. Besides, the fresh fruit and vegetable farmers in Indonesia did not have a wide land, so that when the farmers would increase their production, their income would become lower because maintaining the plants would cost higher. The condition in the upstream would influence the quantity and quality of the commodities produced and the price of the commodities in the market would be high. The gap can be seen from the flood of import commodities in Indonesian markets. This is because local comodities could not fulfill the needs from incountry, and the procedures and fiscal policy set by the government made it easy for import commodities to enter Indonesian markets. Demand for improt commodities is increasing and importers tend to be more ready to meet the customers needs than the local farmers, so that the bullwhip effect value of import comodities tend to be lower. The expansion of demand variabilities of fresh fruits ten to be higher compared to that of fresh vegetables. This is because of the order revision caried out by LotteMart Wholesale that is conducted daily with different quantities. The Bullwhip effect that happen to fresh fruit and vegetable commdities are influenced by various factors. The factors that influence the bullwhip effect are related to the information on order and demand. The information obtained in each level of the supply chain sometimes experience changes and tend to be decentralized so that the actual information obtained by the wholesalers could not reach the suppliers. The factors causing the bullwhip effect on the fresh fruits and vegetables in LotteMart Wholesale Bogor will be discussed later.
_______________________ WORLD TECHNOLOGIES _______________________
REDUCTION OF BULLWHIP EFFECT ON COMMODITY SUPPLY CHAIN IN FRESH FRUITS...
141
Table 1. Results of the calculation of the value of fresh fruit bullwhip October–November 2014 Name of product Anggur Red Globe USA (Kg) Mangga Harumanis (Kg) Semangka Merah Tanpa Biji (Kg)
AVG 979.657 5.597.795 7.692.649
Order STD 630188,9 5463249,05 1934079,5
CV 0,64 0,97 0,25
AVG 1.063.349 5.550.433 7.616.336
Demand STD 523267,83 1843972,96 658309,19
CV 0,49 0,33 0,09
BE 1,31 2,94 2,91
Table 2. Results of the calculation of the value of fresh vegetables bullwhip October–November 2014 Name of product Bawang Merah (1 Kg) Cabai Merah Tw (Kg) Kw.2 Wortel Import (Kg)
AVG 1.242 342.490 3.388.815
Order STD 113,1194 172800,1 458068,728
Factors causing the Bullwhip effect on the Fresh Fruit and Vegetables Based on the research conducted in LotteMart Wholesale Bogor. There are some factors that cause the wullwhip effects on the fresh fruits and vegetables, namely: 1. Price Fluctuation The change in price of fruits and vegetables in traditional markets as well as modern markets happens almost every week. The price set in LotteMart Wholesale is tailored to the market price. Besides, in import fresh fruits and vegetables, the price will be subject to the price in the countries of origin so that price fluctuation often happens. 2. Irregular order batching LotteMart Wholesale Bogor carried out fresh fruit and vegetable order with indefinite period of time. Delivery of fresh fruits and vegetables is in accordance with the weekly revision of order estimation that is informed by the wholesalers ever day. The products can be delivered within once in two days or even once a day, with different quantities. At the end of the week, the wholesalers will carry out an order with the quantity 1,5–2 times more than previously. 3. Decentralized demand forecast updating Demand forecasting is not only conducted by wholesalers, but also by other doers in the supply chain, namely the suppliers and buyers. However, there is often a demand forecasting renewal that is caried out by wholesalers. Wholesalers contact directly their
CV 0,091 0,50 0,14
AVG 1.245 340.214 3.679.302
Demand STD 57,1430952 174117,7 476730,303
CV 0,05 0,51 0,13
BE 1,98 0,98 1,04
customers so that they own acual data of customers’ demand that becomes a foundation for making demand forecasting. Suppliers, on the other hand, do not have the actual data, so that demand forecasting is made based on the previous order data. Change in demand forecasting happening to the supply chain of LotteMart Wholesale is not centralized so that demand variability expansion is bigger in the upstream. Reduction of the Bullwhip effect on Fresh Fruits and Vegetables Using Arena Simulation Model Reduction of the bullwhip effect on the fresh fruits and vegetables in this research uses the Arena Simulation software Rockwell 14.0. Previous research concerning reduction of bullwhip effect carried out by Merkuryev, Petuhova, Landeghem and Vansteenkiste (2002) used Arena Simulation software with a strategy of centralized and decentralized distributing information that is combined with 2 control policies, inventory, min-max and stock-to-demand inventory control. Simulation was carried out with four-stage supply chain, which consists of suppliers, wholesalers, distributors, and manufactures. The best result from the simulation is centralized information structural model and stock-todemand inventory control. The research on the reduction of the bullwhip effect carried out by Radulescu and Ciocardia (2009) simulated information flow and supply chain for SME with Arena 10 software. This makes it possible for the two material and information flows to be modelled, and logical decision for planning and control. The results show that planning scenario and control are compared based on the demand pattern, product structures and processing characteristics.
_______________________ WORLD TECHNOLOGIES _______________________
142
ENTREPRENEURSHIP MANAGEMENT
In this research the simulation was used to demonstrate the material flow with diferent time periods of arrival of the entities. The model will be run using differenttime scenarios, namely: 1. Time between arrivals of the entities is constant and time for taking distributions is triangular (TRIA(0.001, 1.44e+003, 2.88e+003)). 2. Time between arrivals of the entities is constant and time for taking distributins is normal (NORM(1.44e+003, 2.9)). Scenario 2 has the most number out system, namely 2.800 entities, whereas in Scenario 1, the number of entities that have been processed is 2.589 (Table 3). The entity number in shows that the number of entities belong to the system, while the entity number out shows that the number of entities that belong to the system, while the entity number out shows the number of entities that are out from the system, but are not yet processed. In both scenarios, the entity number in is 4.600. The entity number out from the system in Scenario 1 is 3.989 entities and that in Scenario 2 is 4.200 entities. WIP (Work in Process) shows the mumber of entities that are still in the process in the system. WIP Scenario 1 is 432,66 entities, and Scenario 2 is 292,91 entities. The utility value of workers close to zero shows that workers’ productivity is better, and work division is in acordance with the capacity of each worker. The simulation results show that Scenario 2 (normal time distribution) is better than Scenario 1 (triangular time distribution).
The number of entities from each simulation scenario is used to calculate the BE value in order to compare the BE values before and after the simulation. The results of the calculation and the comparison of BE values will be described in Table 4 and Table 5. Scenario 1 and Scenario 2 produce the BE values les than 1, namely 0,14 and 0,23, which indicates that there is no demand variability expansion. When the initial BE value is more than 1, it indicates that there is a demand variability expansion. This shows that time distribution among arrivals can reduce the BE value. The results of the simulation and calculation of BE after simualtion shows that Scenario 2 with time between arrivals is normal. Managerial Implications A good supply chain planning is one of the ways to reduce the bullwhip effect. The supply chain planning for easily-damaged products is focused more on colaboration between suppliers and buyers, such as a contract between a supermarket and farmers based on the multi-eselon supply theory and some sopporting materials for food industrial practices of vegetables, to improve collaborations between various stakeholders (Lee, 2011; Rabade, 2006; Hingley, 2005). LotteMart Wholesale Bogor, in this case, is a wholesaler that has a colaboration with suppliers so that the imformation flow from LotteMart should be in two-ways. Suppliers must get an access to actual data of sales thorugh the internet that is connected to the inforation center of LotteMart.
Figure 3. Model entities stream LotteMart Wholesale Bogor on arena
_______________________ WORLD TECHNOLOGIES _______________________
REDUCTION OF BULLWHIP EFFECT ON COMMODITY SUPPLY CHAIN IN FRESH FRUITS...
143
Table 3. Output SIMAN simulation Arena Scenarios
Variable System Number Out (Kg) Entity Number In (Kg) Entity Number Out (Kg) WIP Utilities: Inspector 1 Inspector 2 Inspector 3 Unloading Officer 1 Unloading Officer 2 Unloading Officer 3
1 2.589 4.600 3.989 432,66
2 2.800 4.600 4.200 292,91
0,23 0,23 0,23 0,41 0,41 0,41
0,23 0,23 0,23 0,44 0,46 0,42
Table 4. The calculation of the value of BEA onion scenarios 1 and 2 scenario scenario 1 scenario 2
AVG 1533,33 1533,33
Order STD 33,50 33,50
CV 0,02 0,02
AVG 863 933,33
Demand STD 137 86,50
BE CV 0,16 0,09
0,14 0,23
Table 5. Comparison of BE values of Shallots before and after the simulation Initial BE 1,98
BE Scenario 1 0,14
Time distribution between the entity arrivals (fresh fruits and vegetables) can reduce the expansion of demand variabilities or the bullwhip effect in the supply chain of LotteMart Wholesale. Estimation of order should be set every Tuesday and Friday, or its frequency every week so that the order period is regular. The supply chain manager should conduct a planning of order periods of fresh fruits and vegetables that is based on product charecteristics and that is in accordance with the needs. Etilen rate, climaterics, non-claimaterics, are some characteristics that must get attention. When the fresh vegatbles have been received by Quality Control (QC), the QC should carry out storing and display according to the characteristics of the product, for example vegetable A can be stored in the chiller, while vegetable B cannot.
CONCLUSIONS AND RECOMMENDATIONS Conclusions Based on the analysis results and discussion of the research, it can be concluded as follows: 1) Fresh fruit and vegetable commodities that undergo the bullwhip effect or expansion of demand variabilities are US
BE Scenario 2 0,23
Red Globe grapes, Harumanis manggoes, seedless watermelon, shallots, and imported carrots. Chillies, on the other hand, do not undergo the bullwhip effect. 2) Factors causing the bullwhip effect in the supply chain of LotteMart Wholesale are price fluctuation, irregular order batching, decentralized demand forecast updating. 3) The best scenario is Scenario 2 whose time distribution between arrival is constant, and time between taking is normal distribution. The bullwhip effect value is reduced after Arena simulation is conducted with 2 scenarios of normal time distribution and triangular time distribution. The first BE value 1,98 changes to become 0,14 and 0,23. This shows that there is no demand variability expansion on the products. 4) The bulwhip effect values of fresh fruit and vegetable commodities are lower than the local fresh fruit and vegatable commodities, because during that time demand for imported commodities is increasing, and the importers tend to be more ready to meet the customers’ demand than the local farmers. Recommendations The recommendations that can be given to companies and to improve further research on the same subject are as follows: 1) LotteMart Wholesale is expected to be
_______________________ WORLD TECHNOLOGIES _______________________
144
able to determine regular order periods and centralize information on actual demand data. 2) Further research is expected to be able to compare the results between decentralized information and centralized information on the supply chain to reduce the bullwhip effect. 3) Further research is also expected to be able to analyze the bulwhip effect values in all elements of the supply chain from the upstream to downstream.
REFERENCES [BPS Kota Bogor] Badan Pusat Statistik Kota Bogor. 2014. http://www.bogorkota.bps.go.id/. [Juni 2015]. [BPS] Badan Pusat Statistik. 2014. Statistik Indonesia. http://www.bps.go.id. [September 2014]. [Pemkot Bogor] Pemerintah Kota Bogor. 2011. Penyelenggaraan Pemerintahan Daerah. http:// www.kotabogor.go.id. [Juni 2015]. Chopra S, Meindl P. 2013. Supply Chain Management: Strategy, Planning & Operations, 5th Edition. Pearson Prentice Hall. Chowdurry SK, Gulati A, Sa’id EG. 2004. The Rise of Supermarkets and Vertical Relationships in the Indonesian Food Value Chain: Causes and Consequences. Asian Journal of Agriculture and Development 2 (1, 2). Hingley M. 2005. Relationship Development in the UK Fresh Produce Supply Chain. Journal of Marketing Channels 12(1): 27-50. http://dx.doi. org/10.1300/J049v12n01_03 Lee HL, Padmanabhan V, Whang S. 1997. Information distortion in a supply chain: The bullwhip effect. Management Science 43(4) : 546-558.http:// dx.doi.org/10.1287/mnsc.43.4.546
ENTREPRENEURSHIP MANAGEMENT
Lee J, Palekar US, Qualls W. 2011. Supply Chain Efficiency and Security: Coordination for Collaborative Investment in Technology. European Journal of Operational Research 210: 568–578. http://dx.doi.org/10.1016/j. ejor.2010.10.015 Liong CY, Loo CSE. 2009. A Simulation Study of Warehouse Loading and Unloading Systems Using Arena. Journal of Quality Measurement and Analysis 5(2): 45-56. Merkuryev YA, Petuhova JJ, Landeghem RV, Vansteenkiste S. 2002. Simulation-Based Analysis of The Bullwhip Effect Under Different Information Sharing Strategies. Proceedings 14th European Simulation Symposium. Merkuryev YA, Petuhova JJ, Landeghem RV, Vansteenkiste S. 2002. Simulation-Based Analysis of The Bullwhip Effect Under Different Information Sharing Strategies. Proceedings 14th European Simulation Symposium. Pujawan I, Mahendrawathi. 2010. Supply Chain Management: edisi kedua. Penerbit Guna Widya. Surabaya. Rabade LA, Alfaro JA. 2006. Buyer–Supplier Relationship’s Influence on Traceability Implementation in The Vegetable Industry. Journal of Purchasing & Supply Management 12:39–50. http://dx.doi.org/10.1016/j.pursup.2006.02.003 Radulescu AV, Ciocardia RM. 2009. Simulation of The Information Flow and Supply Chain Using Arena Modelling Software. Annals of DAAAM for 2009 & Proceedings of the 20th International DAAAM Symposium 20(1). Reddy GP, Murthy MRK, Meena PC. 2010. Value Chains and Retailing of Fresh Vegetables and Fruits, Andhra Pradesh. Agricultural Economics Research Review 23 : 455-460.
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
16
Vharessa Aknesia*)1, Arief Daryanto**), and Kirbrandoko***) Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) IMMI Management Training & Consulting Jl. Tebet Timur Dalam XXI No.20 Jakarta 12820 *)
ABSTRACT Specialty coffee is a coffee of premium quality that has been made through various stages of post-harvest processing and strictly controlled to produce distinctive taste of origins. PT Sinar Mayang Lestari is one of the companies that currently produce and develop specialty coffee type, Arabica Java Preanger. The objectives of the study are to examine competitive advantages and develop an alternative strategy that need to be done by PT Sinar Mayang Lestari for their business development. The research methods used are value chain analysis and VRIO framework to explore competitive advantage owned by the company. The result shows the company currently has a temporary competitive advantage of the technological resources and reputation. By using SWOT-AHP technique, the alternative strategies that can be done by company are as follows: 1) increasing the production of natural and honey coffee type; 2) building coffee center in plantation site for sharing knowledge and innovation media to the farmers; 3) improving the competency of human resource in plantation, post harvest, and promoting area; 4) building management system gradually 5) forwarding integration by building roast and ground coffee business; and 6) maximizing the ability of the land and human resources through research and development. Keywords: competitive advantage, specialty coffee, SWOT-AHP, value chain, VRIO
ABSTRAK Kopi special merupakan kopi dengan kualitas premium yang sudah melalui berbagai tahapan pengolahan pascapanen yang diawasi dengan ketat sehingga menghasilkan cita rasa yang khas sesuai dengan daerah asalnya. PT Sinar Mayang Lestari adalah salah satu perusahaan yang saatini memproduksi dan mengembangkan kopi spesial jenis Arabika Java Preanger. Tujuan dari penelitian ini adalah menganalisis keunggulan bersaing yang dimiliki dan mengembangkan alternative strategi yang perlu dilakukanoleh PT Sinar Mayang Lestari untuk pengembangan usahanya. Penelitian ini menggunakan analisis rantai nilai dan kerangka VRIO untuk mengidentifikasi keunggulan bersaing yang dimiliki perusahaan. Di samping itu, menggunakan analisis SWOT-AHP untuk menentukan alternatif strategi. Hasilnya menunjukkan bahwa perusahaan saat ini memiliki keunggulan bersaing sementara terhadap sumber daya teknologi dan reputasi. Alternatif strategi yang diperoleh menunjukkan perusahaan kedepannya dapat melakukan langkah-langkah sebagai berikut: 1) memperbanyak produksi kopi jenis natural dan honey; 2) membangun coffee center di lokasi perkebunan untuk sharing knowledge daninovasi kepada petani; 3)meningkatkan kompetensi SDM di bidang perkebunan, pascapanen, dan promosi; 4)membangun sistem manajemen secara bertahap; 5) integrasike depan dengan membangun usaha kopi roasting danbubuk; dan 6) memaksimalkan kemampuan lahan dan SDM yang dimiliki melalui riset dan pengembangan. Kata kunci: keunggulan bersaing, kopi spesial, rantai nilai, SWOT-AHP, VRIO
1
Corresponding author: Email:
[email protected]
_______________________ WORLD TECHNOLOGIES _______________________
146
ENTREPRENEURSHIP MANAGEMENT
INTRODUCTION Indonesia is currently in the third place as a coffee producing country in the world. The total amount of Indonesian coffee production in 2013 reached 273.000 tons. A total of 70% is used for export and 30% is domestically consumed. Indonesia has the advantage on the number of specialty coffee owned. Specialty coffee is a coffee of a premium quality that has been made through various stages of post-harvest processing and strictly controlled to produce distinctive taste of origins. In addition to increasing demand, the market price for this type of coffee is also relatively higher than others. Gayo, Lintong, and Mandailing coffee are specialty coffees that have been widely recognized by international community. Besides, Indonesia still has some other types of specialty coffee that need to be developed such as Arabica coffee Java Preanger. The distinction of this type of coffee is on the taste which has sweet and flower’s fragrant. One of the companies that produce and develop Arabica coffee Java Preanger nowadays is PT Sinar Mayang Lestari. PT SinarMayang Lestari which was founded on 12 November 2012 has the goal to introduce Arabica coffee of the Java Preanger type to local and international markets. This goal is also supported with the intention to produce high quality coffee beans that can be accepted by the market. PT SinarMayang Lestari has integrated business units ranging from plantation to café. Export becomes the main business run by most companies today because it gives higher value. Currently, the plantation area owned by PT Sinar Mayang Lestari is approximately 70 hectares with a number of plant stems up to 230.0000. The number of annual production is expected to continue to increase as shown in Figure 1. Green bean produced by the company mostly comes from the cherries supplied by farmers and agents. This can be seen in Table 1.
Table 1. Total production of coffee green bean PT Sinar Mayang Lestari in 2013 Production (ton) PT Sinar Mayang Lestari Farmers Agents Total
Cherry
Green bean
12.400 21.700 27.900 62.000
1.080 4.320 5.400 10.800
Specification: Cherry is the fruit of the coffee plant that still exists in the tree or the freshly picked but not dried. Green beans are cherries that have been processed into seeds, also known as raw coffee beans
The company faces difficulty in terms of quality uniformity since the location of some farmers and agency partners are quite far from the mill. The defect number still ranges between 5% and 10%, whilst the maximum number of physical defects that can be tolerated by specialty coffee is 5%. Consumer's demand for Indonesian coffee has led producers to pay attention about issues of food safety, quality and standards issues as well as environmentally friendly issues. ICO previously has issued a resolution 407 on the Coffee Quality Program. The purpose of this resolution is to create sustainable coffee production through the establishment of quality standards for exported coffee. World coffee trade system also incorporates the idea of sustainable coffee production to increase production in the form of certification by recognized certification agency such as Fairtrade, UTZ Certified, Organic Coffee, and Common Code for the Coffee Comunity (4C). The advantages from exports will encourage other players to get into this business. Bandung district has some companies that also produce Arabica coffee with the type of ‘Java Preanger’. Among these companies are the Golden Malabar and Malabar Indonesia. Golden Malabar is currently specializing in producing Java PreangerLuwak coffee. Meanwhile, Malabar Indonesia produces the same coffee as PT. SinarMayang Lestari that is Arabica specialty coffee type Java Preanger. The products produced by Malabar Indonesia have reached
Figure1. Coffee green bean production of PT Sinar Mayang Lestari, 2013–2017
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
the stage of higher added value in the form of roasted and powdered products. The distinction of PT Sinar Mayang Lestari is that the company has entered the export market and has a cafe to market their products in the downstream. Nonetheless, market condition shows the company cannot only play in a low-cost strategy, but also needs to create a product that has a competitive advantage. The company also can no longer just focus on export business unit as its main activity. Coffee producers need to use their intellectual ability to produce new products with added value and high price, and can compete in niche markets (Johnson, 2012). This also needs to be supported by supply chain and production patterns that intertwine with strong farmers and coffee processing industry (Alejandra et al. 2012). Investments on managerial practices, land, and technology development are also needed to produce better yields and replacement of old plants (Arifin, 2013). Thus, efficiency through cost reduction can be achieved to face the future coffee industry competition (Seranevijaikitkha et al. 2008). Strategies to achieve the above goals can be obtained by looking at the competitive advantage owned by PT Sinar Mayang Lestari through resource-based analysis. Most of the biggest coffee producing countries in the world have fully captured their position. On the contrary, coffee companies in Indonesia still have low level of competition to be able to compete in global market. For coffee commodity itself, it needs to be distinguished between environmental service market approach as an alternative view of sustainable resource management and global buyer-driven initivatives which pay more attention to brand image aspects, security and sustainability of coffee supply in global market. Meanwhile the competitive advantage of coffee commodity can be known if the quality and consistency is guaranteed. (Ibrahim and Zailani, 2010; Arifin, 2013). PT Sinar Mayang Lestari currently has no clear picture about the steps and strategies that will be done to achieve the goal. Requirements of standard quality imposed by the world coffee organizations demand the coffee company to be able to develop its competitive advantage. With value chain approach and the resourcebased analysis, the researcher hopes that it can be used to formulate a strategy to create a sustainable competitive advantage.
147
From the description above, the purposes of this study are to analyze the competitive advantage possesed by PT Sinar Mayang Lestari, and to formulate alternative strategies for PT Sinar Mayang Lestari, so they can expand this business in the future. This study is expected to provide an alternative strategy to increase competitiveness that can help the company in terms of business development. The scope of this study is limited to PT Sinar Mayang Lestari as a company which produces and processes the special Arabica coffee Java Preanger. The focus in this study is within the value chain and competitive advantage possessed by the resources used.
METHODS This study used two types of data which were primary data and secondary data. Primary data were obtained from the questionnaires and interviews with the respondents concerned. Secondary data were collected from the information issued by the government and relevant agencies such as Badan Pusat Statistik (BPS), Direktorat Jenderal Perkebunan (Ditjenbun), International Coffee Organization (ICO), and Asosiasi Eksportir Kopi Indonesia (AEKI). Sampling was done by using purposive sampling technique. The respondents who participated were those who understood the condition of PT Sinar Mayang Lestari and specialty coffee industry in Indonesia. Respondents coming from internal company sources were 6 persons, while the respondents from external company consisted of two experts in the specialty of coffee industry. The stages of data analysis were summarized in Table 2. Table 2 Management strategy process Stages Input stage
Matching stage Decision stage
Frameworks PESTEL, Five forces porter (lingkungan industri) Values chain, VRIO SWOT-AHP Matrik SWOT AHP
Results Atributtes for O (Opportunities) and T (Threats) Atributtes for S (Strengths) and W (Weakness) Alternative strategies SO, WO, ST, WT Strategy priority
_______________________ WORLD TECHNOLOGIES _______________________
148
PESTEL Analysis In general, PEST analysis is an analysis of the politics, economy, social, and technology that may affect the activity and performance of the company, while PESTEL models have incorporated environmental and legal aspects into external factors that are likely to impact the company (Rothaermel, 2012). Five Forces Porter Analysis Five advantages of strength that need to be identified by Porter are: threats from entry or new competitors, bargaining power of buyers, bargaining power of suppliers, threats of substitute products, and level of competition between the competitors (Porter, 2002). Value Chain Value chains are all actions that are considered providing added value and new advantages in every stage of production until the product reaches the consumer (Aimin and Shunxi, 2011). Based on the information from Ilyas et al. (2006), the value chain is divided into some main activities that involve physical creation, sale, and transfer of goods and services to consumers. It is also supported by other activities such as the provision of technology, employees, and the purchase of inputs that is coordinated with the main activity. Companies need to understand what to be included in overall chain of the system to create a sustainable competitive advantage (Achchuthan and Kajananthan, 2012). VRIO Framework According to Barney and Hesterly (2006) in Lin et al. (2012), five questions that must be answered in identifying a competitive advantage possessed by the company are 1) the question of the value (value): whether the resources owned by a company are currently able to take advantage of existing opportunities or address the
ENTREPRENEURSHIP MANAGEMENT
impending threat; 2) the question of scarcity (rarity): whether the resources they have are only owned by a small number of competitor companies; 3) the question of the ability to imitate (imitability): whether the company has a cost disadvantage if they do not have these resources; and 4) the question of the organization (organization): whether the policies or procedures adopted by the company can provide something such as value which is rare and difficult to replicate. Through this resource-based view, company can innovate and gain superiority in competing with other competitors (Jang, 2013). SWOT-AHP Oreski (2012) acknowledges that the AHP has been applied to solve various problems in 150 international journal publications from 1983 to 2003. Most of the AHP is used in the selection, evaluation and decisionmaking processes. In addition, the AHP is also widely used in the planning, development and cost-benefit analysis. The use of AHP, which is combined with SWOT analysis, continues to grow to this day. Oreski (2012) states using AHP can be associated with quantitative values of SWOT factors which have been analyzed earlier. In addition, by combining AHP and SWOT, the selection process will be more efficient in terms of strategy. The purpose of the use of AHP on the SWOT framework is to evaluate the factors of SWOT systematically and equate their intensity. Moreover, the benefits of AHP can be used as a systematic approach for decision making that is considered an added value in the SWOT analysis. The stages that need to be done in the SWOT-AHP method include (Yeon and Kim in Oreski, 2012): 1) Conducting a SWOT analysis; 2) Comparing the pairwise between the SWOT factors that exist in each group of SWOT; 3) Comparing the pair-wise among the four groups of SWOT; and 4) Formulating a strategy based on the results obtained.
Table 3. VRIO framework Summary of VRIO, competitive implications, and economic implications Valuable? Rare? Costly to Organized Competitive Economic imitate? properly? implications implications No No Disadvantage Below normal Yes No Parity Normal Yes Yes No Temporary advantage Above normal (at least for some amount of time) Yes Yes Yes Yes Sustained advantage Above normal Source : adapted from Rothaermel (2013)
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
Penic and Željko Dobrović (2014) state that in the selection of priority indicators, AHP rules out the need to observe the causal relationship of each criterion. However, the techniques used in the AHP take into account the quantitative and qualitative aspects (Jalaliyoon et al. 2012).The flow of thought and the stages in this research can be seen in the framework in Figure 2.
RESULT Five Forces Porter Analysis Factors which can be high threats for the company come from the bargaining power of suppliers and the competition within the group of industries. This is because of the company's dependence on the supply from farmers and agency partners. Meanwhile, the industry group consisting of major exporting companies has the ability to determine the price at the farm level that will affect the amount of company’s supply. Newcomer factors and product substitution are assessed in the medium level because they can be overcome by the company with available resources. The threat from buyer’s bargaining power factor is still relatively low, because there is no standard price which can be used as a reference.
149
PESTEL Analysis Opportunities that can be exploited by the company come from economic, social, and environmental factors. Income growth will encourage the increase of coffee consumption. People's lifestyle is turning into a coffee lover, and penetration of specialty coffee shop has an impact on specialty coffee demand. Coffee specialty can use this opportunity by increasing the number of production through the existing land use. Political factors appear as not giving a direct influence on the condition of the company. Meanwhile, the technology owned by the company has largely been adapted to current developments. Value Chain Analysis PT Sinar Mayang Lestari has a strong dependence on the factors from outside the company. It is seen from the provision of seeds and also coffee bean supply. Low productivity is caused by varieties used and the number of immature plantations. Furthermore, weather factors also affect the level of production of coffee plant. Thus, the company has difficulty in getting uniform qualities because the location of some farmers and agency partners are quite far from the location of the plant. The standard operation procedure which is given to maintain the quality is not all done by the farmers. This shows
PT Sinar Mayang Lestari Sustainable coffee production
PESTEL Five forces Porter (industrial environment)
Coffee industry
Coffee chain
Competitive advantage
VRIO framework Value chain analysis
Internal and eksternal analysis SWOT-AHP Alternative strategies AHP Priority strategies Managerial implications
Figure 2. Conceptual thinking framework
_______________________ WORLD TECHNOLOGIES _______________________
150
ENTREPRENEURSHIP MANAGEMENT
the weakness of control system run by the company. Advantages owned by the company are solely on postharvest management. This is proved by the awards which show that the company has won several coffee festivals as the best taste coffee.The value chain map of PT Sinar Mayang Lestari can be seen in Figure 3.
Process flow from upstream to downstream and the parties involved
Value chain framework aims to look at the position of a company in the market viewed from the relationship with suppliers, buyers and competitors (ACIAR, 2012). Difficulties faced by the company come from domestic market that is still not familiar with the type of Arabica coffee Java Preanger. Marketing activities that are currently done are solely participating in coffee festivals and sending samples to prospective buyers (cafes and retailers). The company needs to consider the direction of product development derived from coffee beans. Powered by growth in the domestic market, the value added at this stage will give a great advantage. This is shown in Figure 4. The type of market management implemented by the company is based on trust and a sense of family. However, the control process on this management is not in a formal form and the cost to move to a new partner is small (Gereffi and Stark, 2011). This will bring an impact on the stability of production and quality produced by the company.
VRIO Analysis PT Sinar Mayang Lestari currently has competitive advantages on technology resources and reputation. These advantages can be easily followed by the competitors because they are temporary. The technology owned makes the company capable to produce Arabica coffee Java Preanger with natural and honey variants. Arabica coffee Java Preanger with natural and honey variants have a higher value than coffee which is produced through the process of fully washed. This is reflected from the Arabica coffee Java Preanger prices which were sold in an auction held from 8–12 October 2014 in JIEXPO; the coffee was priced at $30 per kg, while the normal price in the international market was $5 per kg. Coffee with this processing method produces several flavors namely jackfruit, sweet orange, melon and lychee. This type has not been widely produced in a large amount. Meanwhile, the company has a weakness in the organization's resources. Other resources such as financial, physical, human resources and the ability of the company assessed have comparable capacity with other companies. The VRIO test result can be seen in Table 4.
Final consumer
Trader
MM Cafe
Eksport
Cafe and Retailer Domestic
Factory (Processing & manufacturing) Agents: Mr. Agus Mr. Tarsiman Mr. Engkos Mr. Ili
Plantation (Total area:70 Ha) INPUT (benih & pupuk)
Supplier: Perusahaan mitra (Golden Malabar Coffee), Kebun Benih Sumatra (Aceh)
Farmers: KSO Mr. Ade KSO Mrs. Yuni KSO Mr. Deni
Research and Development (own production)
Figure 3. Map of PT Sinar Mayang Lestari value chain
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
Plant/ Farmers/ Agents
Input Value (.000)
IDR 5
Value added (.000)
Factory IDR 60–75
IDR 7 cherry
green bean IDR 53
IDR 2
151
Export/ Retailer/ Roaster IDR 130–180 roasted IDR 70
Cafe
Final consumer
IDR 250–2.500 powder
IDR 2.370
Figure 4. Value transfer in PT Sinar Mayang Lestari value chain Table 4. Summary of VRIO test to resources at PT Sinar Mayang Lestari Sources
Valuable?
Rare?
√ √ √ x √ √ √
x x √ x x √ x
Finance Physic Technology Organization HR Reputation Company ability
Costly to imitate? x x x x x x x
Identification of Eksternal Internal Strategic Factors and SWOT Matrix External and internal strategic factors obtained from the analysis of the industry environment, PESTEL, VRIO, and value chain will be incorporated into the SWOT matrix to generate alternative strategies that could be done by the company. Alternative strategies are explained in Figure 5.
Alternative Strategies The results from the interviews with the company and also the experts who have competency in specialty coffee industry have gained priority strategies as shown in Table 5. The results are obtained by using AHP. Sustainable competitive advantage can be implemented by utilizing available resources. That is the reason why a company must perform and develop a culture of innovation to have a sustainable competitive advantage (Sandberg and Abrahamsson, 2011; Hannah, 2013). Strength owned by companies today can be exploited to execute alternative strategies. Reproducing coffee products in natural and honey variants (strategy 1) is one example of alternative strategy which can be done
Organized properly? x x x x x x x
Implications Parity Parity Temporary competitive advantage Disadvantage Parity Temporary competitive advantage Parity
to create product differentiation on the market. The advantage gained from these products is a strong flavor component. According to Wilson (2013), the quality of taste (sensory) in coffee may determine the price. Moreover, the company's reputation as a producer of high quality coffee will also have a major impact on prices at the time of the auction. Therefore, in addition to domestic market, these products also need to be introduced to foreign consumers who have become the first consumers of PT Sinar Mayang Lestari. Differentiation is aimed to face competition (Voropajeva 2012). This could then be followed by a 3-run strategy, which is to build a center in the coffee plantation site for sharing knowledge and innovation areas to farmers. This strategy is supported by a research done by Dowdall (2012) on the coffee plantations in the highlands of Guatemala. The results show that the knowledge of market conditions is needed to take advantage of existing opportunities and learn about coffee quality desired by consumers. Strategy 1 and 3 can be used as a priority because it has the purpose of maintaining the supply and quality of seeds produced. Through this strategy, the company can provide assurance to consumers at home and abroad every time there is a demand.
_______________________ WORLD TECHNOLOGIES _______________________
152
Opportunities (O) 1. Increased consumption of specialty coffee at home and abroad due to a shift in lifestyle into coffee lovers 2. Growth of coffee shop in several major cities in Indonesia. 3. Potential vast land that could be used to grow Arabica coffee. Threats (T) 1. Dependence of the farmers and agency partners to meet the needs of coffee beans 2. The Company's major exporters that can affect the price. 3. Unbalanced Weather conditions (long summer and heavy rainfall).
ENTREPRENEURSHIP MANAGEMENT
Strengths (S) 1. The ability of strong capital which can cover the operational costs and gain sales margin in the second year. 2. The location of the factory which is located in the plantation area. 3. Coffee processing technology that can produce different coffee products. 4. Reputation as a company that produces high quality coffee. 5. The human resources who have a high work ethic and a strong family bond that exists among fellow workers. S-O Strategy • Increasing the production of coffee type natural and honey. (S1,S2,S3,O1,O2,O3) • Forwarding integration by building roast and ground coffee business. (S1,S2,S3,S4,S5,O1,O2,O3)
Weaknesses (W) 1. The plantation owned by the company has been unable to meet the required amount of coffee beans for export 2. The human resources have lacking ability about downstream. 3. Managerial system is not well organized. 4. Control of each division and the existing partners in the company is still weak.
S-T Strategy Building coffee center in plantation site for sharing knowledge and innovation media to the farmers. (S1,S2,S5,T2,T3).
W-T Strategy Maximizing the ability of the land and human resources through research and development. (W1,T1)
W-O Strategy • Building management system gradually (W1,W3,W4,O3) • Improving the competency of human resource in plantation, post harvest, and promoting area. (W2,W3,W4,O1,O2,O3)
Figure 5. SWOT Matrix The company ability on value chain management also needs to be improved to increase the competence of human resources and build management systems gradually (strategy 4 and 5). Lack of control in the company can be caused by errors in the management of each stage of the process, which starts from the sale to the payment system to farmers and agents (Gathura, 2013). The value in each level of factors, subfactors and alternative strategies resulted from the SWOTAHP can be seen in Figure 6. Managerial Implications Natural and honey type of Arabica coffee Java Preanger can be reproduced by adding a drying area and applying a standard operational procedure to process natural and honey type. Furthermore, the allocation of workers needs to be done to control processing stage. Coffee center in plantation site for sharing knowledge and innovations to farmers can be started with training about the planting stage. In addition, the company can also invite stakeholders such as governments, traders/ exporters to pay a visit to the coffee center location to hold a discussion with farmers.
HR competencies in the field of plantation, postharvest, and promotion can be enhanced by training related to the development of coffee industry nowadays. Company could send competent human resources to obtain certification (especially for graders, roaster and barista). Furthermore, management system must gradually begin to have a written record or in softcopy (report of work) for each activity undertaken by the company. Clear job desk to each party in managerial system also needs to be done. Forward integration to build coffee roasting and the powder begins by preparing human resources that have the ability in the field of roasting and grinding coffee beans. This will be followed by purchasing machinery for roasting and milling, as well as finding new customers to market the product. The company can do research agreement and cooperate with coffee and cocoa research center Indonesia to maximize land capability and human resources.
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
153
Table 5. Weight of major strategic priority in the hierarchy Alternative strategies Increasing the production of coffee type natural and honey Forwarding integration by building roast and ground coffee business Building coffee center in plantation site for sharing knowledge and innovation media to the farmers Building management system gradually Improving the competency of human resource in plantation, post harvest, and promoting area Maximizing the ability of the land and human resources through research and development
Weight 0,217 0,117 0,216 0,119 0,171 0,101
Specially coffe business development
Strengths (0,260)
Weakness (0,206)
S1 S2 S3 S4 S5 (0,115) (0,258) (0,251) (0,112 (0,264)
Strategy 1 (0000)
Strategy 2 (0000)
Opportunities (0,419)
W1 W2 W3 W4 (0,125) (0,339) (0,245) (0,292)
Strategy 3 (0000)
Strategy 4 (0000)
O1 O2 O3 (0,222) (0,563) (0,215)
Strategy 5 (0000)
Treats (0,116)
T1 T2 T3 (0,244) (0,282) (0,274)
Strategy 6 (0000)
Figure 6. SWOT-AHP to factors, subfactors and alternative strategies CONCLUSIONS AND RECOMMENDATIONS Conclusions The conclusion drawn from this research is PT SinarMayang Lestari currently has a temporary competitive advantage of the technological resources and reputation. Priority strategies that can be done by the company are multiplying the production of natural and honey variant of Arabica coffee Java Preanger and building coffee center in plantation site for sharing knowledge and innovation areas to farmers. This is because the process of planting and post-harvest processing contributes to 50% of the aspects which affect the quality of the coffee. The rest comes from the ability to process the coffee beans in the form of roasted and powdered products. Based on the research, it must be noted that the distance from the market to washing area, frequency of training conducted, and the effort of each actor to improve the quality are some necessary and influencing factors on coffee quality. In
terms of the level of behavior, the main actors who are directly involved in improving the quality, awareness of the required quality trends, knowledge and abilities are important aspects that impact the quality of coffee produced (Megerssa et al. 2012). If farmers know how to plant and process a product, the efficiency in terms of time and cost incurred by the company can be created. Another strategy that can be done in parallel is to increase the competencies of human resources in the field of plantation, post-harvest, and promotion; gradually build management systems; do forward integration to build coffee roasting and powders; and maximize the ability of land and human resources through research and development. Recommendations The company will require substantial funds for coffee development centers and production facilities; therefore, the company needs to consider the funding
_______________________ WORLD TECHNOLOGIES _______________________
154
from third parties. For further research, it is necessary to make formulation of marketing strategies that can be undertaken by the company.
REFERENCES Achchuthan S, Kajananthan R. 2012. A study on Value chain analysis in dairy sector Kilinochchi District, Sri Lanka. Global Journal of Management and Business Research 12(21): 1–14. [ACIAR] Australian Centre for International Agricultural Research. 2012. Membuat Rantai Nilai Lebih Berpihak pada Kaum Miskin. Indonesia. Tabros. Translator Mia Hapsari Kusumawardani. Editor : Teddy Kristedi. Aimin W, Shunxi L. 2011. A Model of Value Chain Management Based on Customer Relationship Management. Journal on Innovation and Sustainability 2(3): 17–21. Alejandra M, Perez G, Viana S. 2012. Cooperation in coffee markets: the case of Vietnam and Colombia. Journal of Agribusiness in Developing and Emerging Economies 2(1): 57–67. Arifin B. 2013. On the competitiveness and sustainability of the Indonesian agricultural export commodities. ASEAN Journal of Economics, Management and Accounting 1(1): 81–100. Dowdall C. 2012. Small farmer market knowledge and specialty coffee commodity chains in Western Highlands Guatemala [disertation]. Florida: Florida International University. Gathura M N. 2013. Factors affecting small-scale coffee production in Githunguri District, Kenya. International Journal of Academic Research in Business and Social Sciences 3(9): 132–149. Gereffi G, Stark K. 2011. Global Value Chain Analysis: A Primer. Center on Globalization, Governance & Competitiveness (CGGC). North Carolina: Duke University. Hana U. 2013. Competitive advantage achievement through innovation and knowledge. Journal of Competitiveness 5(1): 82–96. Ibrahim H, Zailani S. 2010. A review on the competitiveness of global supply chain in a Coffee Industry in Indonesia. International Business Management Medwell Journals 4(3): l05–l15. Ilyas R, Banwet DK, Shankar R. 2006. Value chain
ENTREPRENEURSHIP MANAGEMENT
relationship - a strategy matrix. Supply Chain Forum an International Journal 7(2): 56–72. Jalaliyoon N, Bakar N, Taherdoost H. 2012. Accomplishment of critical success factor in organization; using analytic hierarchy process. International Journal of Academic Research in Management 1(1): 1–9. Jang S. 2013. The offensive framework of resource based view (RBV): inhibiting others from pursuing their own values. Journal of Management and Strategy 4(1): 62–69. Johnson D. 2012. International intellectual property scholars series: using intellectual property rights to create value in the coffee industry. Journals at Marquette Law Scholarly l16(2): 284–327. Lin C, Tsai H, Wu Y, Kiang M. 2012. A fuzzy quantitative VRIO - based framework for evaluating organizational activities. Management Decision 50(8): 1396–1411. Megerssa B, Michael G, Teshome D. 2012. Knowledge and attitude of small holder coffee producing farmers to coffee quality: the case of Oromiya and South Nations Nationalities and peoples regional states, Ethiopia. Journal Application Science Technology 3(2): 31–44. Oreski, D. 2012. Strategy development by using SWOT– AHP. TEM Journal 1(4): 283–291. Penic S, Zeljko D. 2014. Selection of priority cause and effect chains on the strategy map of goals using AHP multiple criteria analysis.Information Management and Business Review 6(1): 8–16. Porter M. 2002. Strategi Bersaing (Competitive Strategy) Teknik Menganalisis Industri dan Pesaing. Saputra L, Editor. Suryanto S, penerjemah. Tangerang: Karisma Publishing Group. Rothaermel F. 2012. Strategic Management: Concepts and Cases. New York: McGraw-Hill/Irwin. Sandberg E, Abrahamsson M. 2011. Logistics Capabilities for Sustainable Competitive Advantage. International Journal of Logistics. 14(1): 61–75. Sapitu U. 2014. Cupping Session Kopi Spesial Indonesia. Bogor:Rumah Kopi Ranin. Seranevijaikitkhan W, Parthanadee P, Buddhakulsomsiri J. 2008. Production efficiency improvement: case study in roasted and ground coffee industry. Asian Journal of Food and Agro-Industry 1(2): 105–115. Shojaei M, Taheri N, Mighani M. 2010. Strategic planning for a food industry equipment
_______________________ WORLD TECHNOLOGIES _______________________
BUSINESS DEVELOPMENT STRATEGY FOR SPECIALTY COFFEE
manufacturing factory, using SWOT analysis, QSPM, and MAUT models. Asian Journal of Management Research 1(1): 759–771. Syafrudin. 2014. Review tentang Kopi Specialty Indonesia. Pengalengan: PT Sinar Mayang Lestari Coffee Plantation. Voropajeva M. 2012. Implementation of the differentiation strategy in café industry in Turku
155
[thesis]. Turku: Turku University of Applied Science. Wilson NL, Wilson AP. 2013. The economics of quality in the specialty coffee industry: insights from the cup of excellence auction programs [paper]. Washington DC: Agricultural & Applied Economics Association’s 2013 AAEA & CAES Joint Annual Meeting.
_______________________ WORLD TECHNOLOGIES _______________________
17
CUSTOMER SATISFACTION AND LOYALTY OF A FRANCHISE PRODUCT EVIDENCE FROM NASI BEBEK GINYO RESTAURANT IN JAKARTA Kartika Puspitasari Adiningsih*), Rita Nurmalina**), and MD. Djamaludin***)
Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) Department of Family and Consumer Science, Faculty of Human Ecology, Bogor Agricultural University Jl. Lingkar Akademik, Kampus IPB Darmaga, Bogor 16680 *)
ABSTRACT The objectives of this study were to: 1) identify the characteristics of the customers of Restaurant Nasi Bebek Ginyo, 2) to analyze factors influencing customer satisfaction and loyalty, and 3) to analyze the level of customer satisfaction and loyalty. Descriptive Analysis, Structural Equation Modelling (SEM), Customer Satisfaction Index (CSI) and Customer Loyalty Index (CLI) were used to analyze the data. The results of the study showed that tangible, reliability, food quality, and perceived value had significantly contributed to influencing customer satisfaction. From the estimates of SEM output, the results of CSI for this study were 67.78% and CLI is 58. 11%. The results of the study suggested for managerial implications to increase the level of customer satisfaction and loyalty. Keywords: customer satisfaction, customer loyalty, SEM, CSI, CLI
ABSTRAK Tujuan dari penelitian ini adalah: 1) mengidentifikasi karakteristik dan perilaku konsumen restoran Nasi Bebek Ginyo, 2) menganalisis faktor-faktor yang mempengaruhi kepuasan dan loyalitas konsumen, dan 3) menganalisis tingkat kepuasan dan loyalitas konsumen.Analisis yang digunakan untuk mengolah data pada penelitian ini, yaitu:analisis deskriptif, Structural Equation Modelling (SEM), Customer Satisfaction Index (CSI) dan Customer Loyalty Index (CLI). Hasil penelitian menunjukkan bahwav ariabel laten eksogen tangible, reliability, food quality dan perceived value memiliki hubungan yang signifikan dalam membentuk variabel kepuasan. Dari hasil analisis SEM, didapat nilai perhitungan CSI untuk konsumen restoran Nasi Bebek Ginyo yaitu sebesar 67,78% dan nilai CLI dari penelitian ini yaitu sebesar 58,11%. Implikasi manajerial yang disarankan untuk manajemen restoran Nasi Bebek Ginyo guna memperbaiki kinerja perusahaan, yang akan berdampak pada peningkatan kepuasan dan loyalitas konsumen. Kata kunci: kepuasan konsumen, loyalitas konsumen, SEM, CSI, CLI
1
Corresponding author: Email:
[email protected]
INTRODUCTION Food is one of the basic human needs in addition to accommodation and clothing, and people must meet these needs in order to survive. An increase in outside home activities has occurred along with the change of the consumption pattern and urban lifestyle, and this condition increases public demand for processed foods.
One of the businesses types related to the provision of foods is the restaurant business. Restaurant business is a business that is highly prospective since every person has to eat. Besides, the number of opportunities and chances to grow are in line with the growing market. Growth in the number of restaurants in Jakarta has continued to increase in which the number of the restaurants in 2007 was amounted to 2.305, and in 2011, the number increased by 3.523. The increasing number of restaurants that continues to grow indicates that
_______________________ WORLD TECHNOLOGIES _______________________
CUSTOMER SATISFACTION AND LOYALTY OF A FRANCHISE PRODUCT EVIDENCE FROM NASI...
competition in the restaurant business is also getting tougher. The emergence of various types of restaurants in Jakarta is the reaction to the innovations of various types of foods in Indonesia in general and in Jakarta in particular. The Indonesian society is now more demanding and aware of high quality yet affordable foods with practicality both on serving and tastes. A type of restaurant that is now favored by customers is a restaurant that serves a variety of processed duck meat in its menus, and the duck meat consumption trend has continued to increase for the past three years. Based on the research by the Directorate General of Livestock in 2010, the need or demand for duck meat continued to increase from 2008 to 2010 on which the needs of duck meat reached 14,3 thousand tons in 2010. The increasing trend of duck meat consumption can be considered as the result of taste shifting from chicken meat to duck meat because of its tasty and savory flavor. Similarly, the market also continues to make innovations in the duck meat processing. One of the restaurants that serve various menus of duck meat is Nasi Bebek Ginyo Restaurant which has been established since 2007. This resaturant is a fastfood restaurant with self-service concept. Because of the competition in restaurant businesses, Nasi Bebek Ginyo needs to make some identifications, monitor and define strategies in order to win the competition. The customer satisfaction is important to be measured by the restaurant management. If the customers are not satisfied with the food, they may choose other restaurants which are also located near this restaurant. Currently, the management of Nasi Bebek Ginyo Restaurant is striving to continue providing good services to its customers with the hope to obtain its customer satisfaction that eventually will increase the customer loyalty. Based on the data obtained from the restaurant management, the average number of customer visits per day is still below the company target, and the increasingly fierce competition among similar restaurants requires the management need to conduct research on the level of satisfaction and customer loyalty to the restaurant and on factors influencing satisfaction and loyalty. The objectives of this study were to identify the characteristics and attitudes of the customers of the Nasi Bebek Ginyo Restaurant, to analyze the factors affecting customer satisfaction and loyalty, and to analyze the level of customer satisfaction and loyalty.
157
Research on Service Quality, Customer Satisfaction, and Behavioral Intentions in Fast-Food Restaurants was previously conducted by Qin and Victor (2009). The tool used was the analysis of Structural Equation Model (SEM) to see the relations among the service quality, customer satisfaction, and behavioral intentions. The results showed that the five dimensions were significantly influential on customer satisfaction, namely, tangibles, reliability, responsiveness, recovery, assurance, and quality empathy. Services and good quality were the two main determinants of satisfaction. Qin and Victor (2008) also conducted research on Determinants of Customer-Perceived Service Quality in fast food restaurants and reviewed their relationships to customer satisfaction and behavioral intentions. This study used SEM as an analytical tool similar to the tool used by Qin and Vector (2010). The result of the study concluded that satisfaction is related to quality. A similar research was also conducted by Tu Y et.al (2011) stating that service significantly influences customer satisfaction, and this has a strong impact on customer loyalty to the sample. METHOD The data collected in this study included both qualitative and quantitative primary data and secondary data. The primary data were obtained through direct interviews in the research location i.e. in Nasi Bebek Ginyo Restaurant in South Jakarta using a secondary questionnaire whereas the secondary data were obtained from various relevant reference sources. The method used in this research was descriptive approach with a survey method and a direct assessment for the Nasi Bebek Ginyo Restaurant. This method was expected to facilitate the researchers to obtain factual, systematic, comprehensive, and accurate information on the facts and characteristics of the object of research. A non-probability method sampling was used in this study using the convenience sampling where the samples were taken based on the availability and easy access (Nazir, 1988). This method is a method used to obtain the desired data by distributing questionnaires to the respondents. The prospective respondents in this survey were the customers who have ever visited this restaurant and made a purchase of the food products at least twice within the last 3 months. As many as 185 customers who were the object of the research filled out the questionnaire based on the rule of the thumb of Structural Equation Modeling (SEM).
_______________________ WORLD TECHNOLOGIES _______________________
158
ENTREPRENEURSHIP MANAGEMENT
In this study, the identification of the customer satisfaction model of Nasi Bebek Ginyo restaurant only referred to the concept of Service Quality or abbreviated with SERVQUAL (Zeithaml et al. 1990) and two exogenous latent variables were adopted from the research conducted by Qin and Victor (2009), namely, dimensions of food quality and perceived value were added. Expected further research may use the concept as well as other theories on the customer satisfaction and loyalty in Nasi Bebek Ginyo Restaurant. There were 34 indicator variables made up in the SEM model and a number of 185 people were involved in this study. The 1–5 Likert scale was used as the measurement scale with response categories from very dissatisfied (VD) to very satisfied (VS). In the structural model, there are seven latent exogenous variables (free) which describe the dimensions that affect customer satisfaction including tangible, reliability, assurance, responsiveness, empathy, food quality, and perceived value. The seven latent exogenous variables
are associated with an endogenous latent variable (not free) i.e. customer satisfaction while the customer satisfaction latent variable affects customer loyalty latent variable. This study used 4 analyses, namely, a descriptive analysis, Structural Equation Modeling (SEM), Customer Satisfaction Index (CSI) and Customer Loyalty Index (CLI). Descriptive analysis is a research method that involves collecting data in order to test hypotheses or answer questions related to the state at the present time. SEM analysis has been widely used in research on customer satisfaction as a multivariate statistical technique dependency where it allows researchers to analyze one or more independent variables with one or more dependent variables. Analyses of CSI and CLI can measure the level of customer satisfaction and loyalty to a product/service as a whole and give the percentage to what extent the products/services meet the customer satisfaction. The research framework is presented in Figure 1.
Nasi bebek Ginyo Restaurant
Increased competition in Jakarta restaurant
Number of fluctuative visitors
Performance service and products
SEM
CLI
Customer Satisfaction Nasi Bebek Ginyo Restaurant
Performance Assessment 7 Dimensions:
Consumer Loyalty Nasi Bebek Ginyo Restaurant
Tangible, Reliability, Assurance, Responsiveness, Emphaty, Food Quality, Perceived value
Managerial Implicationfor the management staff of Nasi Bebek Ginyo Restaurant Notes : Scope of research Suggestion for the management Research step
Figure 1. Conceptual thinking framework
_______________________ WORLD TECHNOLOGIES _______________________
CUSTOMER SATISFACTION AND LOYALTY OF A FRANCHISE PRODUCT EVIDENCE FROM NASI...
RESULT Characteristics and Customer Behaviour Based on Demography The descriptive analysis showed that the respondents of Nasi Bebek Ginyo consisted of more males than females with a percentage of 50,3% and 49,7% respectively. Most respondents are aged between 17–27 years with a percentage of 61,6%, and in majority (70,8 %), their marital status is single. Based on the level of education, the majority of respondents (57,3 %) have a high level of education with the bachelor degree (S1). Based on the type of work, some respondents work as private employees with a percentage of 44,3% and based on income per month, a number of respondents (27%) earn over IDR 5 million. In this study, the use of behavioral data by the respondents was related to the buying patterns in Nasi Bebek Ginyo Restaurant. The analysis showed that some of the respondents had visited Nasi Bebek Ginyo restaurant more than 5 times with a percentage of 41.6%, and most of the respondents visited the restaurant on weekdays with a percentage of 62.7%, while 49.7 % of them visited the restaurant in the evening. In addition, the majority of respondents chose to come to the restaurant together with friends with a percentage of 69.7%. Based on the data, the majority of respondents (47,6%) obtained information on Nasi Bebek Ginyo Restaurant by themselves i.e. when they passed the place on the way to their office. Their main reason for revisit the restaurant was that the foods were considered to be reasonably cheap with the percentage of 32,4%. If seen from their frequency of visits, a number of respondents (32,4 %) came to the restaurant once a month; however, the majority of the respondents bought ducks in a small quantity, i.e. between 1–3 pieces of duck in a single visit
159
with a percentage of 94,1%, and 53 % of the respondents spent between IDR50.000 and IDR100.000 per visit. Factors Affecting the Customer Satisfaction and Loyalty Analysis of Structural Equation Modeling (SEM) is an analytical tool looking at the relationship among the components of satisfaction based on a model framework that has been theoretically developed. The researchers combined the literature on the quality of services in the restaurant business to develop a frame of mind. Qin and Victor (2009) added the three dimensions of service on the five dimensions of SERVQUAL including the dimensions of recovery, food quality, and perceived value; however, in this study, only two dimensions of food quality and perceived value were added. The model in this research used seven latent variables called exogenous latent variables that is tangible, reliability, assurance, responsiveness, empathy, food quality and perceived value and two endogenous latent variables i.e. satisfaction and loyalty. Each latent variable is composed by a component called an indicator, and the exogeneous indicator is for the exogenous latent variables, and the endogenous indicator is for the endogenous latent variables. Based on Table 1, the suitability criteria of the measurement of the models discussed in this study included the df parameter, p-value, Goodness of Fit Index (GFI), Adjusted Goodness of Fit Index (AGFI), Root Mean Square Error of Approximation (RMSEA), comparative Fit Index (CFI), and Root Mean Square Residual (RMSR), and all of them are based on the criteria of Wijanto fitness model (2008) and Sharma (1996). Based on the values obtained, the overall model was built in order to have an appropriate value so that the model can explain the empirical information constructed based on the data collected.
Table 1. The results of the suitability criteria for the overall research model Suitability criteria df p-value GFI AGFI RMSEA CFI RMSR
Cut off value ≤ 3,00 ≥ 0,05 ≥ 0,90 ≥ 0,80 ≤ 0,08 ≥ 0,90 RMSRi+1 < RMSRi
Research result value 0,98 0,57 0,92 0,87 0,00 1,00 0,06
Information Good fit Good fit Good fit Good fit Good fit Good fit Good fit
_______________________ WORLD TECHNOLOGIES _______________________
160
ENTREPRENEURSHIP MANAGEMENT
The test results showed that the exogenous latent variables of tangible, reliability, food quality and perceived value have a significant relationship (real) in forming satisfaction variables. This is consistent with studies that had been conducted by the Qin and Victor (2009) on customer satisfaction in the fast-food restaurant where the results showed that the dimensions of tangibles, reliability, and responsiveness, recovery, assurance, empathy, and food quality have significant influences in shaping customer satisfaction. The similarities between the results of this research and the research conducted by Qin and Victor (2009) included tangible dimension, reliability, food quality, and perceived value where both have a significant influence in the form of satisfaction.
As for the exogenous latent assurance variables, Responsiveness and Emphaty are not significantly associated in shaping the satisfaction variables because the t-test value was smaller than 1,96. These three latent variables which are significantly unrelated will not be removed from the SEM Model, because the entire variable components are fixed to contribute in shaping a good SEM Model on the customer satisfaction research of Nasi Bebek Ginyo Restaurant. The Modele of de Cross Schema Customer satisfaction obtained after the data processing by logiciel AMOS 7.0 is shown in Figure 2.
Figure 2. The value of the t-test structural models of cross diagrams research
_______________________ WORLD TECHNOLOGIES _______________________
CUSTOMER SATISFACTION AND LOYALTY OF A FRANCHISE PRODUCT EVIDENCE FROM NASI...
Effect of SERVQUAL Dimensions, Food Quality and Perceived Value towards Satisfaction The effects of the dimensions of tangible, reliability, assurance, responsiveness, empathy, food quality, and perceived value on the satisfaction of the coefficient of the construct were gamma (γ). Based on the results of SEM analysis (Figure 2), it can be seen that only four dimensions i.e. tangible, reliability, food quality and perceived value had a significant effect on satisfaction where the t-test values were above 1.96 i.e. 3.35, 2.16, 3.29 and 3.59 respectively whereas the dimensions of assurance, responsiveness, and empathy had no
161
significant effect on the satisfaction where the t-test values were below 1.96 i.e.-1.39, -1.49, and 1.91 respectively. Based on Table 2, the dimensions of tangible (physical facilities) had the strongest influence on the satisfaction that is 0.67. Based on the order of magnitude of the influence coefficients, reliability (0.60) was the second strongest influence dimension, food quality (0.41) was the third, perceived value (0.36) was the fourth, and empathy or or caring (0.31) was the last and had the least effect on the satisfaction.
Table 2. Coefficient of constructs and influence of indicator variables Atribut
Load factor
Construct coefficient
Influence
0,33 0,43
0,67 0,67
0,22 0,29
0,69 0,83 0,88
0,60 0,60 0,60
0,41 0,50 0,52
0,78 0,74 0,41
-0,48 -0,48 -0,48
-0,38 -0,36 -0,20
0,39 0,32 0,61 0,88 0,87
-0,27 -0,27 -0,27 -0,27 -0,27
-0,11 -0,09 -0,17 -0,24 -0,24
0,90 0,93
0,31 0,31
0,28 0,28
0,83 0,83 0,71 0,41
0,41 0,41 0,41 0,41
0,34 0,34 0,29 0,17
0,83 0,92 0,60
0,36 0,36 0,36
0,30 0,33 0,22
Tangible Dimension Cleanliness of the dining room and the toilet (X1) Seat availability (X2) Reliability Dimension Easy payment system (X7) Reliable Staff (X8) Providing expected service (X9) Assurance Dimension Wide knowledge of the staff (X10) Trustworthy Staff (X11) Security in financial transaction (X13) Responsiveness Dimension Speed of waitress serving food at buffet (X14) Speed of Transaction Process (X16) the willingness of employees to help (X17) Alertness of employees to face the consumer complaints (X18) The ability to deal with complaints (X19) Emphaty Dimension Speed of the employee apologize upon wrong things (X20) Concern for consumer complaints (X21) Food Quality Dimension Delicious taste of food (X22) Tender duck meat texture (X23) Ckean and nice food serving (X25) Food and drink variations (X26) Dimensi Perceived Value Food Proce (X27) Drink Price (X28) Proud feeling after eating at the restaurant duck Ginyo (X29)
_______________________ WORLD TECHNOLOGIES _______________________
162
Positive construct coefficient values indicate that these dimensions contributed to the improvement of customer satisfaction of Nasi Bebek Ginyo restaurant based on the empiric data while the dimensions of assurance and responsiveness had negative values that is -0,48 and -0,27, indicating that both dimensions had negative contributions towards satisfaction formation. This suggests that early consideration of a prospective customer to come and eat at the restaurant Rice Duck Ginyo is seen from the dimensions of tangible (physical facilities) where seat availability is an important concern for the management to improve customer satisfaction. The Influence of Satisfactory Dimension towards Loyalty Dimension For the endogenous latent variables, satisfaction was only measured through indicators of overall satisfaction (Y1) with its load factor value of 0,87 since the overall satisfaction information can explain the satisfaction variables. Based on the results of the Structural Equation Model (SEM) analysis output, there is a significant relationship among the components of satisfaction in building customer loyalty, if seen from the t-test values greater than 1,96 that is 11,36. From the load value of 1,00 and t-test value of 11,36, satisfaction has a significant effect on customer loyalty. Based on the results, it can be concluded that the four variables can be accepted as a measure of loyalty customer because the t-test value is greater than 1,96. Of the four indicator variables observed, the loyalty dimension has the largest load factor i.e. the re-purchase indicator (Y2) with a factor value of 0,72, and willingness to repurchase describes loyalty of the customers of Nasi Bebek Ginyo Restaurant. Customer Satisfaction Index (CSI) TTo see the level of customer satisfaction in service quality of Nasi Bebek Ginyo Restaurant, Customer Satisfaction Index (CSI) calculation was used. After determining the factors that affected customer satisfaction through SEM analysis, the level of customer satisfaction was analyzed using the CSI. The CSI values were calculated from the dimensions of tangible, reliability, assurance, responsiveness, empathy, food quality, and perceived value, and the CSI is strongly associated with an overview of the evaluation of the respondents to the overall performance of the company and product aspects studied.
ENTREPRENEURSHIP MANAGEMENT
Measurement of customer satisfaction with the CSI method illustrated that the result of respondents' satisfaction evaluation indicator variables studied was quite high i.e. 67,78% and they were in the satisfied category (Simamora, 2002). In general, if the value of CSI is already above 50%, it can be said that customers are satisfied with the product; on the contrary, if the value of CSI is below 50%, customers are not fully satisfied with the product. Based on this, Nasi Bebek Ginyo Restaurant has been able to meet its customers' satisfaction by 67,8%. Customer Loyalty Index (CLI) Based on the calculation of the loyalty aspect, it can be seen that the customer loyalty index (CLI) of Nasi Bebek Ginyo Restaurant was amounted to 58,11%. This index indicates that respondents are loyal to the restaurant due to its performance (Simamora, 2002). Meanwhile, based on the indicator variables studied, it can be said that the indicator variable of giving recommendation on Nasi Bebek Ginyo Restaurant to others (Y3) had a high contribution to the loyalty with an index of 18,21 if compared to the other indicators. This shows that if the respondents feel satisfied with the services provided by Nasi Bebek Ginyo Restaurant, they will be more loyal to this recommended restaurant than to the others. Managerial implications Based on the research results, a number of recommendations can be given for the improvement of the performance of the services in Nasi Bebek Ginyo Restaurant, and these recommendations are related to customer satisfaction and loyalty. The management should regularly evaluate the quality of services and food of the business to continuously improving the attributes of the dimensions of tangible, reliability, food quality, and perceived value that significantly affect satisfaction; as a result, the customers will increasingly be satisfied with the performance of the restaurant’s current and future services and products. The managerial implications are briefly presented in Table 3.
_______________________ WORLD TECHNOLOGIES _______________________
CUSTOMER SATISFACTION AND LOYALTY OF A FRANCHISE PRODUCT EVIDENCE FROM NASI...
163
Tabel 3. Managerial implications Dimension Tangible
- -
Food quality
- - - - -
Perceived value
- -
Reliability
Managerial Implications Addition of extra chairs at lunch time Upgrading of the room so that there are more spaces for additional chairs especially during the Ramadan Month Employment of a number of waiters to help customers find a place to sit Consistency in the quality of services provided and periodical evaluation in the provided services t Periodical provision of soft skill training for the staff Usage of more advance technology system to support better payment system Maintenance of food quality, with a focus on the cooking process to maintain the flavor of duck meat Development of recipe innovations for new types of foods and drinks Provision of rebates or creation of a full package menu of food and drinks at an affordable price
CONCLUSIONS AND RECOMMENDATIONS Conclusions A number of conclusions to answer the research objectives as the results of the research on customer satisfaction of Nasi Bebek Ginyo Restaurant can be obtained. The descriptive analysis of the results shows that the majority of the customers of Nasi Bebek Ginyo are employees with an undergraduate education level and from the upper-middle social class. In general, the respondents visit the restaurant with friends in the evening and make purchases in small portions. The factors that influence satisfaction and loyalty are influenced by the dimensions of tangible, reliability, food quality and perceived value which have significant influences in shaping customer satisfaction. Satisfaction is the component forming loyalty to the effect of 0,97. There is a significant relationship between satisfaction and loyalty. Overall, the respondents expressed their satisfaction with the performance of Nasi Bebek Ginyo Restaurant with a customer satisfaction index of 67,78%, meanwhile the level of customer loyalty shows that customers are quite loyal to the restaurant with a loyalty index of 58,11%. For the managerial implications, the restaurant should maintain the factors that are considered to have a major influence in shaping the satisfaction, among which is to maintain the quality of the food and quality of services which it provides to its customers. Another major concern is the tangible dimension, where the availability of adequate seating is necessary. Recommendations A number of suggestions given to the management of Nasi Bebek Ginyo Restaurant include continuing making improvements in the attributes that give the
highest and lowest contributions, without having prejudice to the attributes that give the average value contribution. Essentially, all the attributes should get the attention of the management, because all of them contribute to the customer satisfaction. Moreover, the restaurant management should continue taking measurements of customer satisfaction at a certain period of time; thus, this measurement can be used as inputs and evaluations in improving the quality of service performance. The results of the study conducted with structural models explain that the dimensions of assurance, responsiveness, and empathy have no significant effects on satisfaction. In order to analyze the influence of the three dimensions, it is suggested that further research add indicator variables to the dimensions so that they become more significant or reconstruct the SEM model. In this study, the dimensions of satisfaction can be seen in the concept of SERVQUAL, and two dimensions were taken from the previous research in the form of satisfaction, and further research is expected to be able to use the concept as well as other theories in forming satisfaction and loyalty. For example, by adding the variables of recoverability and employee attitude, and by using another theory applying the concept of marketing mix 7'P (product, price, place, promotion, people, process, and physical evidence).
REFERENCES Nazir M. 1988. Metode Penelitian. Jakarta: Ghalia Indonesia. Qin H, Victor RP. 2008. Determinants of customerperceived service quality in Fast-food Restaurants and their relationship to customer satisfaction and behavioral intentions.The Quality Management Journal 15:2–11.
_______________________ WORLD TECHNOLOGIES _______________________
164
Qin H, Victor RP. 2009. Service quality, customer satisfaction, and behavioral intentions in fastfood restaurants. International Journal of Quality and Service Sciences 1:1–78. Qin H, Victor RP. 2010. Perceived service Quality in Fast-food Restaurants: empirical evidence from China. International Journal of Quality and Service Sciences 1:1–78. Simamora B. 2002. Panduan Riset Perilaku Konsumen. Jakarta: PT. Gramedia.
ENTREPRENEURSHIP MANAGEMENT
Tu Y, Lin S, Chang Y. 2011. Relationships among service quality, customer satisfaction and customer loyalty in chain restaurant. Management and Business Journal 3:52–70. Zeithaml VA, Parasuraman A, Berry LL. 1990. Delivering Quality Service: Balancing Customer Perceptions and Expectation. New York: The Free Press.
_______________________ WORLD TECHNOLOGIES _______________________
DESIGNING COMPANY PERFORMANCE MEASUREMENT SYSTEM USING BALANCE SCORECARD APPROACH
18
Cecep Mukti Soleh*)1, Idqan Fahmi**), and Imam Teguh Saptono***) PT Mitra Bahtera Sejati Jl. HR Rasuna Said X-5, Kav 1-2 Kuningan, Jakarta 12950 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) PT Bank BNI Syariah Jl. Jend Sudirman Kav. 1 Lt. 9, Jakarta 10220 *)
ABSTRACT This research aimed to design how to measure company performance by using balance scorecard approach in coal transportation services industry. Depth interview was used to obtain qualitative data determination of strategic objectives, key performance indicators, strategic initiatives, and in charge units for each balanced scorecard perspectives while the quantitative data were obtained from weighting through questionnaires and analyzed using paired comparison to get a perspective what mostly affected the performance of the company. To measure the achievement of corporate performance, each KPI used (1) the scoring system with the methods that higher is better, lower is better and precise is better; (2) traffic light system with the help of green, yellow, red for identification of target achievement. This research result shows that in the balance scorecard perspective, the most influences on the overall performance of the company include the customer's perspective (31%), financial perspective (29%), internal business processes (21%), learning, and growth 19%). Keywords: balance scorecard, paired comparison, coal transportation service
ABSTRAK Penelitian ini bertujuan untuk merancang pengukuran kinerja perusahaan dengan menggunakan pendekatan balance scorecard di industri jasa pengangkutan batu bara. Data kualitatif diperoleh melalui indepth interview digunakan untuk menentukan sasaran strategik, indikator kinerja utama, inisiatif strategi dan penanggungjawab setiap divisi setiap perspektif balance scorecard, sedangkan data kuantitatif digunakan untuk pembobotan melalui kuesioner dan dianalisis dengan menggunakan metode paired comparisson untuk mendapatkan perspektif yang paling berpengaruh terhadap kinerja perusahaan. Ukuran pencapaian kinerja perusahaan dari setiap KPI menggunakan; (1) scoring system dengan bantuan metode higher is better, lower is better dan precise is better;(2) traffic light system dengan menggunakan bantuan warna hijau, kuning, merah untuk identifikasi pencapaian target. Penelitian ini menyimpulkan bahwa perspektif yang paling berpengaruh terhadap kinerja perusahaan adalah perspektif pelanggan (31%), kemudian diikuti oleh perspektif keuangan (29%), proses internal bisnis (21%), dan pertumbuhan dan pembelajaran (19%). Kata kunci: balance scorecard, paired comparison, jasa pengangkutan batu bara 1
Corresponding author: Email:
[email protected]
INTRODUCTION The financial crises in Europe and the United States have a negative impact on the growth of the global economy, and one effect of the crisis is weakening coal prices in the international market. Dynamic external environmental conditions result in high competition in coal transportation service industry; therefore, the
companies have been trying to maintain their stability and continue to develop their business that they can be ahead of the competition. PT Trans Power Marine, Tbk (TPM) is one of the coal transportation services for national and regional areas in Indonesia using the barge from the loading port to the mother vessel. Measurment of the performance
_______________________ WORLD TECHNOLOGIES _______________________
166
achievement of PT TPM at present is based on the achieving financial aspects i.e. if revenues increase, the company's performance achieved is good, and vice versa. Therefore, for its goals and strategies, PT TPM has outlined its vision, missions and business strategies. Luis and Biromo (2007) argue that the financial statement is an activity that occurrs in the past and does not translate the strategy for the future. The views of these experts are associated with the objectives of the company so that it can compete well and become a world-class company; therefore, the company is required to improve the assessment system of more comprehensive performance i.e. it should not only be based on the financial aspect but also on other internal and external management aspects. Internal aspect aims to prevent conflicts of interest among the management aspects in the organization's internal division such as finance, marketing, technical, operasion and HR, while the external aspect aims to identify the wishes of the customer. Therefore, in terms of corporate strategy at the present, it needs to be translated into an action strategy that is easily understood and implemented by all levels of the organizational members of PT TPM. Kaplan and Norton in 1992 introduced a method to enhance the company's performance measurement and translate the corporate strategy into an action strategy that is easily understood by all levels of the organization through the research conducted by introducing the balance scorecard method or abbreviated with BSC. In regard to this study, PT TPM intends to enhance the company's performance measurement system by applying the balanced scorecard method. Based on this background, the objectives of this study were: (1) to describe the vision and missionss of the company that they are the target of the strategy and should be easily understood and divided into four balanced scorecard perspectives, (2) to identify benchmarks and key performance indicators for the determination of four perspectives of the balanced scorecard, (3) to establish the major factor in the implementation of the balanced scorecard in the company so that it can run effectively.
METHODS The types of data required in this study included qualitative and quantitative data. Qualitative data in the form of respondents' statements were obtained
ENTREPRENEURSHIP MANAGEMENT
through discussions with management and staff experts to describe the vision, strategic objectives, Key Performance Indicators (KPIs), strategic initiatives as well as formulation of the strategy map, while the quantitative data were expressed in numbers i.e. the data weighting strategic objectives and KPIs of the four balanced scorecard perspectives. Sources of data used in this study included primary and secondary data where the former was obtained through interviews with respondents from the management and employees of PT TPM and the latter was obtained from the documentation of the internal company data report, literature in the form of journals, and theses. Data and information collection techniques included: (1) direct observations in the company of PT TPM, (2) in-depth interviews carried out by elements of the management and staff experts of PT TPM, (3) and literature study by reading, discussing, and studying previous research related to this study. The method to determine the respondents was carried out by intentionally (purposive sampling) from the top management to staff experts. The selection of respondents was based on the consideration of their competence and capacity in each field. The stages of data processing and analysis are described as follows: • Describing the vision and missionss of the company through discussions with the management and staff experts in the internal enterprise to determine the strategic objectives and key performance indicators (KPIs) grouped into four balanced scorecard perspectives: financial perspective, customer, internal business processes and learning and growth. • Creating a strategy map to determine the causal relationship from each perspective of the balanced scorecard. • Performing the weighting for each goal and KPI strategy from the four perspectives of the balanced scorecard and analyzing them using paired comparison techniques to determine the most influential perspective on the performance of the company. • Conducting scoring system where higher is better, lower is better and precise is better and the method of the traffic light system to determine the achievement of KPI performance against targets on the four balanced scorecard perspectives.
_______________________ WORLD TECHNOLOGIES _______________________
DESIGNING COMPANY PERFORMANCE MEASUREMENT SYSTEM USING BALANCE SCORECARD...
167
RESULTS
Customer perspective
This chapter describes the stages in the process of designing a company’s performance measurement system using the BSC from the translation of the vision and missionss of the company and the design of the performance of this chart.
Based on Table 2, in customer perspective section, customer satisfaction index obtained the highest score (11%) indicating that index measuring customer satisfaction was the most influential aspect to the achievement of strategic objectives of satisfaction and customer loyalty where the in charge division is under the Bussiness Development (BD) department.
The translation of vision and missionss of the company The vision and missions of the company were translated into factors of strategic goals based on the discussion in depth interviews with the management and grouped the four perspectives of the balanced scorecard, namely, customer perspective, financial, internal business processes and learning and growth. The achievement of the strategic objectives of the company was presented by lag indicators and lead indicators through in-depth interviews with the management and internal expert staff for each of the strategic objectives towards the four perspectives previously determined. Table 1 describes the results of the formulation of strategic goals and performance measures through lag indicator and lead indicators. The design of performance achievement system The process of designing company performance appraisal chart began with the weighting of the factors of strategic objectives and indicators obtained by the management and some of the experts in the company's internal staff for each balance scorecard perspective. The results of the weighting were then analyzed using a paired comparison method to obtain the most influential aspect in the performance measurement. Furthermore, the determination of in charge division for each of the strategic objectives and KPI was based on the four perspectives of the balanced scorecard corporate organizational structure that included Division of Procurement and Logistics, Business and Development, Finance (Accounting and Tax, Finance and Treasury, Legal, Information and Technology), Operational (Technical, Operation and Commercial) and HRD (Human Resources and General Affairs) to facilitate the balanced scorecard case-cading to the individual level.
Financial perspective Based on Table 2, in financial perspective section, Return on Assets (ROE) obtained the highest score (14%) indicating that as a public company it was very concerned with the rate of return on capital company investors so that investors would be more confident and the company capital became strong. The in charge division is under by the Finance department (FIN). Internal business process perspective Based on Tabel 2, in internal business process perspective section, customer retention obtained the highest score (5%) indicating that the possibility of customers for switching their vendors was very high; therefore, providing added values and giving the best service to customers are two strategies to retain customers in internal business process perspective. The in charge division is under the Operation Department (OPS). Learning and growth perspective Based on Tabel 2, in learning and growth perspective section, increase of ERP system obtained the highest score (9%) indicating that, to improve effectiveness and productivity of the company, a system that integrates with all operational sites is necessary. The in charge division is under the by Human Resources and Development (HRD). Based on Table 2, the overall performance measurement showed that customer perspective obtained the highest score (31%) indicating that customer perspective gave the most contribution to the overall company performance. Based on discussions with the management and staff experts in internal company in compensating the fluctuating coal market conditions and intense competition in the same industry, turn over customer will be easier and faster; therefore, providing
_______________________ WORLD TECHNOLOGIES _______________________
168
ENTREPRENEURSHIP MANAGEMENT
the best service to customer is very necessary. However, the lowest score was obtained by learning and growth perspective (19%) indicating that this perspective gave less contribution to the company performance, and the reason for this is that the resources of this company are very strong. Moreover, based on discussions with the management and staff expert in HR Division & GA, level of comfort and engagement in this company are very high, because the management implements the kinship system with a very strong personal approach.
Strategy Map of PT TPM Learning and growth perspective is also called intangible assets i.e. as human resource infrastructure; therefore, the company strives to constantly improve the employee competence and engagement supported by the updated information technology systems. Updated technology can improve the performance in terms of creativity, efficiency and productivity, thus resulting in the provision of the best customers services.
Table 1. The formulation of strategic objectives by lag and lead indicators Strategic objectives Customer perspective C1 Improvement in customer statisfaction and loyalty
Lag indicators
Customer statisfaction index
Lead indicators Company information can be accessed easily and quickly, on time delivery of cargo, responses in terms of handling the problem Development of a good communication system with local resources for the community. Development a CSR system, especially in the area of operations. Provision of quotas on local resources to be included in the organization's members
C2 Positive energization to community
of business disruption by the community
C3 Improvement in relationships and good C4 Improvement in engagement with the Government Financial perspective
New customers; Existing customers
Increase in the number of new and old customers
Compliance toregulation
A system which follows the company's operational standards required the by Government
F1 Increase in revenue
Revenue from new customers Increase in number of customers Revenue from existing On time delivery of cargo customers Return on Asset (ROA) Amount of cargo sent
F2 Growth of shareholder Return on Equity (ROE) value Internal business process perspective Availability O1 Improvement in the quality of ship Demurage maintenance Despatch O2 efficiency in % fuel consumtion to operating costs revenue; % charter to revenue O3 Health, Safety and Lost Time Injury (LTI); Environment (HSE) Recordable Injury rate (RIR) compliance O4 Management On time order schedule; The procurement best quality and price O5 Increase in the best Customer retention service to customers Learning and Growth Perspective G1 Improvement of Employee engagement index; employee engagement Competency gap index and competency G2 Information systems Improvement in ERP system and the latest technology
Improvement of company productivity The use of spare parts of qualified vessels Implement of planned maintenance system Productivity of company performance Improvement of safe working environment Rapid procurement of parts of high quality Customer satisfaction
Reduction in employee turn over Easy and fast monitoring system
_______________________ WORLD TECHNOLOGIES _______________________
DESIGNING COMPANY PERFORMANCE MEASUREMENT SYSTEM USING BALANCE SCORECARD...
169
Table 2. The results of KPI Weighting and Divisions in charge of the four perspectives Strategic objectives Improvement in customer statisfaction and loyalty Positive energization to community
Weights (%) Key performance indicator (%) 11 Costumer statisfaction index 5
# of business disruption by community # new costumer # existing costumer compliance to regulation
Improvement in relationships and good cooperation with customers
10
Improvement in engagement with the Government Customer perspective
5
Increase in revenue
15
Revenue from the existing costumers Revenue from the new costumers Return on Asset (ROA)
Growth of shareholder value Financial perspective
14
Return on Equity (ROE)
Improvement in the quality of ship maintenance
4
efficiency in operating costs
5
Health, Safety and Environment (HSE) compliance
4
Management procurement
2
Increase in the best service to customers Internal business process perspective
5
Availabillity Demurage Despatch revenue Fuel to revenue Charter to revenue LTI rate frequency Recordable injury rate On Schedule time order The best quality and price Costumer retention
Improvement of employee engagement and competency
10
Information systems and the latest technology Learning and growth perspective
9
Employee engagement index Competency gap index Improvement of ERP System
Internal business process perspective is also as an addition of new sources of revenue including innovation process, operation and after-sales service. Innovation processes are carried out by improving maintenance quality of ships, so the availability of vessels remain high. In internal procurement, it always to get the best price and quality accurately and quickly. In the operation process, the company implements operational cost efficiency, especially in terms of fuel consumption which gets the second rank of total fixed expenses. The objective of the application of health safety and environment (HSE) for all employees in carrying out their activities at PT TPM is that they can work safely and healthily and care for the environment. Application of appropriate HSE in any operational activity will affect the improvement of quality of repairs and provision of the best service to customers
Weights 11
PIC division BD
5
BD
5 5 5
BD BD BD
31 6 6 3
FIN FIN FIN
14 29 1 2 2 2 2 2 2 1 1 5 21 5 5 9
FIN OPS OPS OPS OPS OPS OPS OPS OPS OPS OPS HRD HRD HRD
19
since safe and comfortable working atmosphere will increase employee productivity. Customers are the end users of what the company produces, in this case, they are the coal transportation services users; therefore, the company assumes that customers are the main source of company revenue. Thus, improving good relationship and cooperation with customers can increase customer satisfaction and loyalty, and evetually will increase the company revenue. Beside customers, social responsibility of the government and public particularly in a operation area, the company should be able to give positive energy to the local community so that the operations can be run safely and smoothly without any resistance from the community.
_______________________ WORLD TECHNOLOGIES _______________________
170
ENTREPRENEURSHIP MANAGEMENT
Financial perspective on traditional strategies serves as primary barometer in measuring company performance. In balanced scorecard method, financial perspective is the final result of all corporate strategy processes; therefore, PT TPM determines two strategic objectives in the financial perspective, i.e. increasing the company revenue and sustaining the shareholder value growth, and the revenues are generated from new and old customers. The outline in Figure 1 describes the strategy map of PT TPM as causal relationship of each balanced scorecard perspectives, ranging from human resource infrastructure in learning and growth perspective, internal business process, customer and financial perspective. Balance Scorecard Chart
Learning and Growth
Internal Business Process/ operation
Customer
Finance
The achievement of company performance is highly dependent on scores of each KPI; therefore, it is necessary to use a scoring system and traffic light system as signs whether the KPI achieves the target or not. Determination of traffic light system was based on higer is better, precises is better and lower is better whereas traffic light system method is to facilitate and understand the performance achievement with colors (red, yellow, green). Limits of each color was determined through discussions with the management and staff expert in the internal company. Nurcahyanie (2008) states that (1) red indicates that KPI has not
achieve the target or the achievement was below target, so it is necessary to improve it; (2) KPI Score Limit shows that if KPI is <60, the color is yellow indicating an achievement but needs to be improved; and (3) KPI Score Limit shows if KPI is 60
80. Table 3 shows the outline of performance measurement simulation with quantitative data taken from Prospectus Company of 2013. The results showed that the sixteen KPI were green, indicating that the company performance target had been achieved, and one KPI was red i.e. new customer, indicating that the target had not been achieved. Based on discussions with the staff experts in internal, it is very reasonable because coal market in the world is being weakened and competition is very tight, thus it negatively gives impact on coal business transportation, so in this case, a new customer becomes obstructed. Initiative strategy to achieve these targets are to create added values and diversify products, and one KPI is yellow i.e. dispatch revenue (incentives revenue because the delivery is earlier than that stated in the contract agreement). The overall company performance measurement in accordance with the quantitative data of 2013 obtained score 148 with the highest contribution from the customer perspective (31%).
Increase Company’s Income (F1) Increase the relationship with customer (C3)
Increase Ship maintenance quality (O1)
Increase Customer Satisfaction and Loyalty (C1)
Increase the best customer service (O5)
Operational cost efficiency (O2)
Advanced System of Information and Technology (G2)
Figure 1. Strategy Map PT TPM
_______________________ WORLD TECHNOLOGIES _______________________
G2. The information systems and the latest technology
G1. Improve employee engagement and competency
O5. Increasing the best service to customers Learning and Growth Perspective (G) 19%
O4. Management procurement
G1.1 Employee engagement index (%) G1.2 Competency gap index G2.1 Improve ERP System (%)
O2.1 % fuel to revenue O2.2 charter to revenue O3.1 LTI rate frequency O3.2 Recordable injury rate O4.1 On Schedule time order (%) O4.2 The best quality and price (%) O5.1 Customer retention (%)
O2. Efficiency operating costs
O3. Health, Safety and Environment (HSE) complied
O1.1 Availabillity (%) O1.2 Demurage O1.3 Despatch revenue
F1.1 Revenue existing costumer F1.2 Revenue new customer F1.3 Return on Asset F2.1 Return on Equity
C1.1 Costumer statisfaction index (%) C2.1 # of business disruption by community C3.1 # New customer C3.2 # existing customer C4.1 compliance to regulation (%)
2
Lag
O1.Improving the quality of ship maintenance
F2.The growth of shareholder value Internal business process perspective (O) 21%
F1. Increase revenue
C4.Improve engagement with Government Financial perspective (F) 29%
C3.Improve relationships and good cooperation with customers
C1.Improve customer statisfaction and loyalty C2.Positive energize to community
1 Customer perspective(C) 31%
Strategic objectives
Table 3. The design of simulation performance achievement PT TPM
98 1 50
21 28 1,30 2,50 93 93 100
96 0 1,0
7 1 4,99 11,39
1 11 97
83 0
Actual Mar-13 3
99 0,5 98
19 25 1 1,63 98 98 100
98 0 1,5
10 2 6,0 15
2 13 100
98 0
Target Mar-14 4
Higher is better Lower is better Higher is better
Lower is better Lower is better Lower is better Lower is better Higher is better Higher is better Higher is better
Higher is better Precise is better Higher is better
Higher is better Higher is better Higher is better Higher is better
Higher is better Higher is better Higher is better
Higher is better Precise is better
Scoring system
98,99 200,00 51,02
110,53 112,00 130,00 153,37 94,90 94,90 100,00
97,96 100,00 67
70,00 50,00 83,17 75,93
50 84,6 97,0
85,0 100
5
Score (3): (4)
5 5 9
2 2 2 2 1 1 5
1 2 2
6 6 3 14
5 5 5
11 5
6
148,33
4,95 10,00 4,59
2,21 2,24 2,60 3,07 0,95 0,95 5,00
0.98 2,00 1,33
4,20 3,00 2,50 10,63
2,50 4,23 4,85
9,35 5,00
7
Weights Weights of score (%) (5) x (6)
Green Green Red
Green Green Yellow Green Green Green Green Green Green Green
Green Red Green Green
Red Green Green
Green Green
Trafic light
DESIGNING COMPANY PERFORMANCE MEASUREMENT SYSTEM USING BALANCE SCORECARD... 171
_______________________ WORLD TECHNOLOGIES _______________________
172
Managerial implications The results of this study obtained some formulations of strategic objectives, key performance indicators, strategic initiatives and determination on the most influential factors of corporate performance measurement. Based on the scoring system, customer perspective has the highest score (31%), followed by financial perspective (29%), internal business process perspective (21%) and learning and growth perspective (19%). Customer perspective is the most influential factor to company performance as a whole due to lower coal market in the world. The simulation results of applications of the scoring system and traffic light system using quantitative data from the company prospectus of 2013 obtained sixteen green KPI which means that the company has achieved its target. The three red KPI for customer perspective indicates that the company has not achieved the target of the number of new customers. A strategic initiative in increasing new customers is diversification product transport. The three red KPI for financial perspective indicating that the company has not achieved the target of revenue from new customers as an impact of number of new customers which is red. Three yellow signs at learning and perspectives shows dispatch revenue. The overall performance with predetermined score target by the management and staff at internal company is good with a score of 148. Based on the explanation above, balanced scorecard method is a performance measurement system based on integrated financial and non-financial aspects.
CONCLUSION AND RECOMMENDATION Conclusion The vision and missions of the company are an initial foundation to formulate company strategic objective factors in implementing the balanced scorecard method. Based on the discussions with the management and internal staff experts, translation of strategic objectives factors of four balanced scorecard perspectives is in the form of strategy map to determine the causal relationship of each perspective for its easier socialization. Determination of key performance indicators and strategic initiatives of each strategic objective is
ENTREPRENEURSHIP MANAGEMENT
based on indicators of lag and lead. The determining factor that most influences the company performance is weighting performance of each strategic objective and KPI of the four balanced scorecard perspectives with paired comparison technique, and the results of weighting shows that the customer perspective is the most influential factor to company performance, with a percentage of 31%, followed with financial perspective (29%), internal business processes (21%) and learning and growth (19%). Based on discussions of the research results and the experts from the internal company, commitment and cooperation among members of the company are very important in the application of balanced scorecard method in the company, since there is a linkage among the Divisions in which they have a mutual influence in achieving the performance of the company.
Recommendation The balanced scorecard method is formulated and implemented based on the environmental conditions of the company, and in this case, it is based on the existing structural organizational model in the company. In this research, the author designed the performance measurement system limited to corporate level (company) only; therefore, this research can be further developed (casecading) to the employee level so that each employee has a key indicator performance that should be carried out separately in their daily work activities. As a result, the performance measurement of each employee will be more objective because the assessment is based on the actual data, and eventually has a positive impact on the employee performance asseement the future.
REFERENCES Aida DSN, Syarifa H, Naning WA 2011. Perancangan sistem pengukuran kinerja pada unit perusahaan di PT Pos Indonesia (Persero) Cabang Gresik (karya tulis). Surabaya: Institute Teknologi Surabaya. Brewer PC, Speh TW. 2000. Using the balance scorcard to measure supply chain performance. Jurnal of Business Logistic Miami University 21(1): 75– 84.
_______________________ WORLD TECHNOLOGIES _______________________
DESIGNING COMPANY PERFORMANCE MEASUREMENT SYSTEM USING BALANCE SCORECARD...
Franceschini F, Galetto M, Turina E. 2012. Techniques for impact evaluation of performance measurement system. International Journal of Quality & Reliability Management 30(2):197– 220. Kaplan RS, Norton DP. 2000. Balance Scorecard: Menerapkan Strategi menjadi Aksi. Pasla PRY. Penerjemah. Jakarta: Erlangga. Nurcahyanie YN. 2008. Perancangan sistem pengukuran kinerja dengan metode Integrated Performance Measurement System (IPMS) studi kasus program studi Teknik Industri Universitas PGRI Adi Buana Surabaya [tesis]. Surabaya: Universitas PGRI Adi Buana Surabaya. Perlman Y. 2013. Causal relationship in the balances scorecard: a path analysis approach. Ramat-Gan 52900 Journal 4(1):11–33.
173
Silma HL, Arif H, Shintya PA 2013. Analysis of human resources performance with human resources scorecard case study at PT Erindo Mandiri. Pasuruan [karya tulis]. Surabaya:Universitas Brawijaya. Simoes AM, Rodrigues JA. 2013. The effectivness of the balance scorecard on strategy management processes: a case study in a Portuguese industrial company. Journal of Management of Bussines Studies 2(3):154–164. Yuwono, Sony. Sukarno, Edy. Ichsan, Muhammad. 2007. Petunjuk Praktis Penyusunan Balance Scoorecard; Menuju Organisasi yang berfokus pada Strategi. Jakarta: PT Gramedia Pustaka Umum.
_______________________ WORLD TECHNOLOGIES _______________________
19
CONSUMER SEGMENTATION OF REFILLED DRINKING WATER IN PADANG Awisal Fasyni*)1, Mukhamad Najib**), and Kirbrandoko***) Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Management, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 ***) IMMI Management Training & Consulting Jl. Tebet Timur Dalam XXI No. 20 Jakarta 12820 *)
ABSTRACT The purposes of this study were to analyze consumer segmentation of refilled drinking water based on their behavior and to recommend strategies for increased sales of Salju depot. The study was conducted using a survey of family and non-family consumers in Nanggalo, North Padang, West and East Padang. The respondent selection technique is using a convenience sampling, which is based on the availability of elements and easiness of obtaining these samples. The analysis used for segmentation is cluster analysis and CHAID. The results showed that there were five segments in family consumer and four segments in non-family consumer. Each family segment was different in terms of usage and consumption level, while non-family segments differ in terms of consumption duration and consumption level. Salju depot could aim market segments that provide benefits, specifically segments with high consumption levels both in family and nonfamily consumers, maintain the price and quality of the product and show the best performance in serving customers, set the open hours and optimize the messaging services. Keywords: refilled drinking water, segmentation, Padang, CHAID
ABSTRAK Penelitian ini bertujuan menganalisis segmentasi konsumen air minum isi ulang berdasarkan perilakunya dan merekomendasikan strategi peningkatan penjualan bagi depot Salju. Penelitian dilakukan dengan metode survei terhadap konsumen keluarga dan konsumen nonkeluarga di Kecamatan Nanggalo, Kecamatan Padang Utara, Kecamatan Padang Barat dan Kecamatan Padang Timur Kota Padang. Teknik pemilihan responden menggunakan convenience sampling, yaitu berdasarkan ketersediaan elemen dan kemudahan mendapatkan sampel tersebut. Analisis yang digunakan untuk segmentasi adalah analisis cluster dan CHAID Hasil penelitian menunjukkan terdapat lima segmen konsumen keluarga dan empat segmen konsumen nonkeluarga. Masing-masing segmen keluarga berbeda dalam hal penggunaan dan tingkat konsumsi, sedangkan segmen nonkeluarga berbeda dalam hal lama konsumsi dan tingkat konsumsi. Salju dapat menyasar segmen yang dapat memberikan keuntungan yaitu segmen dengan tingkat konsumsi yang tinggi baik untuk keluarga maupun nonkeluarga, mempertahankan harga dan kualitas produk yang dihasilkan serta menampilkan performa terbaik dalam melayani konsumen dan menetapkan jam buka dan jam layanan pesan antar yang optimal. Kata kunci: air minum isi ulang, segmentasi, Padang, CHAID 1
Corresponding author: Email: [email protected]
INTRODUCTION Padang is one of the cities in Indonesia, most of whose people use AMIU as their water resource. In 2013, there were 42,23% households that consumed AMIU in Kota Padang (BPS Sumbar, 2014). This number has kept increasing compared to the previous years. The high demand for AMIU has enhanced AMIU industrial development in Kota Padang.
One of DAMIU in Kota Padang is Salju. This DAMIU is located in Kelurahan Kalumbuk Kecamatan Kuranji Kota Padang. Salju has been established and operated since 2005. Its sale has kept increasing from year to year. However, in the last years its graphic has undergone a decrease. The increasing sale from 2010 to 2011 was 20%, and in the following years it decreased up to 6,8% and 4,2%. This was not in line, compared to AMIU consumption in Kota Padang, whose growth increased
_______________________ WORLD TECHNOLOGIES _______________________
CONSUMER SEGMENTATION OF REFILLED DRINKING WATER IN PADANG
significantly from year to year (Figure 1). The number of households that consumed AMIU in Kota Padang increased 5,5% in 2011. Afterwards, it increased up to 5,7% in 2012 and then 8,6% in 2013. Based on the field survey, there are two groups of AMIU consumers, namely family consumers and nonfamily consumers. Family consumers are the ones that buy AMIU for other purposes, apart from household necessities, such as school and eating places. For Salju DAMIU, sale to family consumers is bigger than that to non-family consumers. The sale comparison in 2015 is 75:25 (Table 1). Nevertheless, the sale to family consumers is smaller than that to non-family consumers. The sale to family consumers from 2013 to 2014 increased as much as 33% and from 2014 to 2015 it increased again as much as 5%. On the other hand, the sale to non-family consumers increased by 66% from 2013 to 2014, and 40% from 2014 to 2015. Therefore, it can be said that the slow growth of Salju DAMIU sale was due to the low sale of family consumers.
The increasing number of DAMIU will give consumers a lot of alternatives when deciding to buy DAMIU. The many product choices will make consumers more selective when deciding to buy DAMIU. Research by Pandey and Rai (2014) showed that when deciding to buy products such as clothing, foods, and daily need goods, consumers will choose a place that can give them satisfaction. Then research by Piche and Garcia (2001) proved that price was the main factor for consumers to buy types of the same food. To increase sale, Salju DAMIU must be able to maintain consumers it has and increase the number. Therefore, DAMIU needs to choose clear market targets that can give it benefits. To identify appropriate market targets, it is important to carry out segmentation based on consumers’ behavior. This is because the condition in the field shows that the consumers’ behavior (family and non-family) when consuming AMIU varies very much in usage, ways of purchasing and consumption level. By carrying out segmentation based on consumers’ behavior, DAMIU can take appropriate steps in making products, setting prices, distributing and promoting the products according to market targets. The consumers’ behavior is an important aspect for a company in making decision and setting strategies. By understanding the consumers’ motivation and buying behavior, the company can formulate the strategies and increase the amount of the consumers’ purchase (Istudor and Pelau, 2011). A modern marketing concept expects the company to put consumers as the center of company’s activities and create values for the consumers’ satisfaction (Gunay and Baker, 2011).
Number of sales (gallon)
Number of AMIU households consumption (%)
The competitive condition faced by Salju DAMIU has been getting very tight recently. Although DAMIU growth in Padang city has decreased, for some locations around Salju the DAMIU growth has been increasing (Figure 2). Salju marketing is located in three subdistrict areas, namely Kalumbuk, Gunung Sarik, and Gurun Lawas. The DAMIU growth in those three subdistricts increased by 22.73% from 2012 to 2013, and 7,40% from 2013 to 2014. This condition is relatively the same as that in four districts, whose densest distribution is located in Kota Padang, the number of which has kept increasing. The four districts mentioned are Nanggalo District, North Padang District, West Padang District, and East Padang District. Based on this, it can be said that the slow growth of Salju sale is due to a competitive factor.
175
AMIU consumption growth in Padang
sales of Salju DAMIU
Figure 1. Comparison of AMIU consumption growth in Padang and sales of Salju DAMIU (BPS Sumbar (2014); DAMIU Salju (2014)).
_______________________ WORLD TECHNOLOGIES _______________________
176
ENTREPRENEURSHIP MANAGEMENT
Table 1. Comparison between Salju DAMIU sale to family consumers and non-family consumers Family
Year 2013 2014 2015
Number 1500 2000 2100
% 83 80 75
Rate of sale per week (gallon) Non-family Number % 300 17 500 20 700 25
Total Number 1800 2500 2800
% 100 100 100
Number of DAMIU
Source: Salju DAMIU, 2015.
Padang City Locations around Salju Three sub-district areas
Figure 2. DAMIU Growth (Health Agency of Kota Padang, 2014) Consumers of different characteristics want the same product with a slightly different attribute for a different reason (Larson, 2004). This is also related to different ways of introducing the needs by the consumers (Venkatesakumar et al. 2008). Segmentation is an important and useful thing for a company; it is even a fundamental principle in a modern marketing concept (Dibb and Stern, 1995). Market segmentation is also an effort to reach competitive superiority and good company’s financial performance (Hunt et al. 2004). After carrying out segmentation, the company can determine the desired market targets according to the company’s goals, competency, and resources (Kotler, 2009). Based on the above description, the purpose of the research is to analyze AMIU consumers’ segmentation based on their behavior and to recommend the strategies to increase sales for Salju DAMIU through marketing mix.
METHODS In order to get a comprehensive picture, this research was carried out on AMIU consumers in Kota Padang. However, the locations chosen were Nanggalo District, North Padang District, West Padang District, and East Padang District in Kota Padang. These four districts were chosen because the densest DAMIU distribution was located there.
The research data included primary as well as secondary data. The primary data were the respondents’ characteristics and the consumers’ behavior that were obtained through questionnaires completed by the respondents, while the secondary data were obtained from related institutions, literary study and others. The population of the research was AMIU consumers (family and non-family). The size of samples was determined based on the following formula:
Notes: n = number of samples Z = normal distribution α = level of trust ρ = proportion of population e = sampling error Based on the above formula, using ρ = ½, α = 5% and e = 8%, resulted in 150 samples. Of the 150 respondents the quota of respondents could be determined, namely 90 respondents for family and 60 respondents for nonfamily. The non-family respondents were schools, school canteens, and restaurants. The technique for choosing respondents was convenience sampling, i.e. it was based on the available elements and the easiness to get the samples.
_______________________ WORLD TECHNOLOGIES _______________________
CONSUMER SEGMENTATION OF REFILLED DRINKING WATER IN PADANG
The analyses used for segmentation was cluster analyses and CHAID (Figure 3). The segmentation was formed based on the behavior aspect of the AMIU consumers that consists of some variables, namely duration of consuming AMIU, AMIU usage, amount of consumption, types of drinking water sources used, reasons for consuming AMIU, ways of purchasing, intensity of purchase, size of gallon used, and actions taken when the intended DAMIU is closed.
RESULTS Respondents’ Demography Most family respondents were females, i.e. 61%. The age of respondents varied; the most dominant was between 20 and 30 years old (32%), followed by those aged between 41 and 50 (29%), and the rest was those between 31 and 40 years old and between 50 and 60 years old. Most respondents were married (66%) and there were 7% of respondents that were widows or widowers. The respondents had varied educational levels: graduates of Junior High School, Senior High School, Diplomas, Bachelor Degrees (S1) and Masters Degree (S2). However, most of the respondents were of Senior High School graduates (40%). Like education, types of job also varied, consisting of civil servants (31%), private employees (23%), entrepreneurs (26%) and others like housewives and students were 20%. The amount of monthly expenditure of most respondents was above three millions (50%), and then between 2 and 3 million rupiah (47%) and a few between 1 and 2 million rupiah (3%). Out of 60 non-family respondents, there were 13 schools, 8 school canteens and 39 restaurants. The amount of monthly expenditure for each respondent varied. However, most of them (85%) were above 25 million rupiah per month. Then there were some respondents that had monthly expenditure between 5 and10 million rupiah per month (8%), 10 to 15 million rupiah (5%) and 20 to 25 million rupiah (2%). These varied expenditures were related to the types and sizes of the places (schools, school canteens, and restaurants). Consumers’ Segmentation The variables that form the family consumers segment are consumption levels and their usage, while variables that form non-family segment are duration
177
of consumption and levels of consumption (Table 2). There are five family segments: the first segment is those that consume AMIU water for drinking only with low consumption level (32 respondents); the second segment is those that consume AMIU water for drinking only with high consumption level (19 respondents); the third segment those that consume AMIU water for cooking only (5 respondents); the fourth segment is those that consume AMIU water for drinking and cooking with low consumption level (10 respondents); and the fifth is those that consume AMIU water for drinking and cooking with high consumption level (24 respondents). Then there are four segments of nonfamily respondents: the new consumer segment with low consumption level (10 respondents), the new consumer segment with high consumption level (8 respondents), the old consumer segment with low consumption level (3 respondents), and the old consumer segment with high consumption level (39 respondents). The consumption level of family consumers range between 1 and 5 gallons per week, while in the nonfamily consumers the consumption level ranges between 1 and 20 gallons per week. Therefore, the definition given to determine the high-low level of the consumption level is its median, namely 3 gallons for family consumers and 10 gallons for non-family consumers. As for the consumption duration for nonfamily consumers, the definition used is 3 years. This is because the CHAID results classify consumers into two categories, namely those that consume AMIU for 1 until 3 years and those that consume AMIU for more than 3 years. Thus, consumers that have consumed AMIU less than 3 years can be considered as new consumers and consumers that have consumed AMIU for more than 3 years are old consumers. Competition among DAMIU DAMIU marketing strategies Segmentation based consumers’ behavior
Cluster analyses and CHAID
Managerial implications
Figure 3. Frame of thought
_______________________ WORLD TECHNOLOGIES _______________________
178
ENTREPRENEURSHIP MANAGEMENT
The formed segments have each own demographic characteristic (Table 3). In the family consumers, the first segment is dominated by females aged between 41 and 50 years old, married, senior high school level, working as private employees and expenditure 2 until 3 million rupiah per month. The second segment is mostly females aged between 20 and 30 years old, married, senior high school level, working as civil servants and private employees, and expenditure 2 until million rupiah per month. The third segment is mostly females aged between 31 and 40 years old and between 51 and 60 years old, married, civil servants, S2 level (Masters Degree) and expenditure more than 3 million rupiah per month. The fourth segment is dominated by males, aged between 51 and 60 years old, senior high school level, civil servants, and expenditure more than 3 million rupiah per month. The fifth segment is dominated by females aged between 41 and 50 years old, S1 level (Bachelor degree), working as civil servants, and expenditure more than 3 million per month. Basically age, sex, and marital status among each segment member vary a lot and are evenly distributed. For educational levels, types of job, and amount of expenditure per month in the third segment is quite significant, in which all members are of S1 and S2 graduates, working as civil servants and the amount spent per month is more than 3 million. To find out whether there is correlation between demographic variables and segments, it is important to carry out chi-square test. From the chi-square test it is found out that there is no significant correlation between age, sex, marital status and types of job and segments. However, there is a significant correlation between education level and the amount of expenditure per month on the one hand and segments on the other.
Demographic characteristics of each segment of nonfamily can be seen in Table 4. The first segment consists of canteens and schools with expenditure amount 5 to 10 million per month. The second segment is restaurants and schools with expenditure amount more than 25 million rupiah. The third segment is schools with expenditure amount more than 20 million rupiah per month. The fourth segment is restaurants and schools with expenditure amount more than 25 million rupiah per month. The expenditure amount of the first segment ranges between 5 to 15 million rupiah and more than 25 million rupiah. The second segment, on the other hand, spends more than 20 million rupiah per month, and the third and fourth segments all have expenditure amount of more than 25 million rupiah per month. Chi-square test is carried out to find out whether there is a significant correlation between a demographic variable and segments. The results show there is a significant correlation between types of place and amount of expenditure on the one hand and segments on the other. Details about consumers’ behavior in each segment can be seen in Table 5. Most members of family segment have consumed AMIU for more than 3 years; only the third segment have consumed AMIU for less than 3 years. As for non-family consumers there are 2 segments that have consumed AMIU for more than 3 years. (The third and the fourth) and 2 segments that have consumed AMIU for less than 3 years (the first and the second). The first and second segments in the family consumers only consume AMIU for drinking, the third segment consumes AMIU for cooking only, and the fourth and fifth segments consume AMIU for drinking and cooking. On the other hand, all segments of non-family consumers consume AMIU only for drinking.
Table 2. Consumer Segmentation Consumption level
Family Usage
Drinking and cooking Lowa 32 5 10 Highb 19 0 24 a Low if ≤ 3 gallons/week for family and ≤ 10 gallons/week for non-family b High if > 3 gallons/week for family and > 10 gallons/week for non-family Drinking
Cooking
Non-family Consumption duration New (≤ 3 years)
Old (> 3 years)
10 8
3 39
_______________________ WORLD TECHNOLOGIES _______________________
CONSUMER SEGMENTATION OF REFILLED DRINKING WATER IN PADANG
179
Tabel 3. Demography of family consumer segment Demography Age (years) 20 - 30 31 - 40 41 - 50 51 - 60 Sex
Male Female Marital status Married Unmarried Widow/Widower Education level Junior High School Senior High school Diploma S1 S2 Types of job Civil servants Private employees Entrepreneurs Others Amount of expenditure/month Rp 1million – Rp 2 million Rp 2 million – Rp 3 million > Rp 3 million
1
2
31 25 38 6
47 16 26 11
31 69
Segment (%) 3
4
5
20 40 0 40
30 20 10 40
25 17 33 25
42 58
40 60
60 40
38 62
62 25 13
63 37 0
80 0 20
70 30 0
67 29 4
19 53 6 16 6
5 47 16 32 0
0 0 0 40 60
10 40 10 30 10
4 25 8 63 0
13 31 28 28
32 16 32 20
100 0 0 0
50 20 30 0
33 25 21 21
9 78 13
0 53 47
0 0 100
0 20 80
0 21 79
Table 4. Demographic segment of non-family consumers 1
Segment (%) 2 3
4
Types of place School School canteen Restaurant
20 80 0
38 0 62
100 0 0
13 0 87
Amount of expenditure per month Rp 5 million – Rp 10 million Rp 10 million – Rp 15 million Rp 15 million – Rp 20 million Rp 20 million – Rp 25million > Rp 25million
50 30 0 0 20
0 0 0 13 87
0 0 0 0 100
0 0 0 0 100
Demography
All segments of family consumers consume AMIU less than 5 gallons a week. If we put it in details, the first, third, and fourth segments in the family consumers consume AMIU less than 3 gallons a week, while the second and fifth segments consume more than 3 gallons. The first and third segments of non-family consumers consume less than 10 gallons per week, while the second and fourth segments consume more than 10 gallons per week. All segments in family and non-family consumers consume only AMIU, except the
third segment of family consumers that also consume AMDK gallons. This is because consumers consume AMIU and AMDK for different purposes. The reasons for consuming AMIU vary within each segment. The first and second segments of family consumers mostly consume AMIU because the price is cheap, while the other three segments consume AMIU because the quality is guaranteed. On the other hand, the nonfamily consumers consume AMIU because it is cheap and practical.
_______________________ WORLD TECHNOLOGIES _______________________
180
ENTREPRENEURSHIP MANAGEMENT
The method of buying that is used by most members of family segment is the same that is sometimes they buy it themselves, and sometimes it is delivered. Nonfamily segment, on the other hand, has it delivered. The purchasing intensity that is used by most members of family segment is once or twice a week, while the members of non-family segment varies. Only the third segment buys once or twice a week.
The size of gallon used by each segment of family is mostly 19 liters and all non-family segments also only use 19 liters. When the intended DAMIU is closed or finished, most family consumers and all non-family consumers will turn to other DAMIU. Only the third segment of family consumers will turn to AMDK gallon.
Table 5. Distribution of samples based on AMIU consumer behavior and segments Notes
1
Family segment (%) 2 3 4
5
Non-family segment (%) 1 2 3 4
Duration of AMIU consumption < 1 year 1 to 2 years 2 to 3 years > 3 years AMIU usage
0 13 6 81
0 5 5 90
0 20 80 0
0 0 30 70
0 0 25 75
0 30 70 0
0 0 100 0
0 0 0 100
0 0 0 100
Drinking Drinking and cooking Cooking Amount of AMIU consumption
100 0 0
100 0 0
0 0 100
0 100 0
0 100 0
100 0 0
100 0 0
100 0 0
100 0 0
1 to5 gallons 6 to 10 gallons 11 to 15 gallons > 15 gallons Types of drinking water source
100 0 0 0
100 0 0 0
100 0 0 0
100 0 0 0
100 0 0 0
0 100 0 0
0 0 50 50
0 100 0 0
0 0 38 62
AMIU only AMIU and AMDK ggallon Reason for consuming AMIU
100 0
100 0
0 100
100 0
100 0
100 0
100 0
100 0
100 0
Cheap Practical Guaranteed quality Methods of buying AMIU
56 41 3
63 32 5
0 20 80
30 30 40
8 29 63
40 60 0
38 62 0
33 67 0
56 44 0
Come directly Sometimes come sometimes delivery Delivery Intensity of AMIU purchase
18 41 41
32 36 32
0 0 100
10 50 40
17 50 33
0 0 100
0 0 100
0 0 100
0 0 100
1 to 2 times 3 to 4 times 5 to 6 times > 6 times Size of gallons used
83 19 0 0
58 41 0 0
100 0 0 0
50 50 0 0
62 38 0 0
10 10 80 0
12 63 25 0
100 0 0 0
13 56 21 10
19 liters 19 liters and 10 liters 19 liters and 5 liters Actions when DAMIU closed
94 0 6
74 10 16
100 0 0
60 40 0
88 8 4
100 0 0
100 0 0
100 0 0
100 0 0
0 97 3
0 100 0
40 60 0
0 90 10
4 96 0
0 100 0
0 100 0
0 100 0
0 100 0
Buy AMDK gallon Buy other DAMIU Cooking water
_______________________ WORLD TECHNOLOGIES _______________________
CONSUMER SEGMENTATION OF REFILLED DRINKING WATER IN PADANG
Managerial Implications Based on the research results, there are some recommendations for DAMIU in relation with consumers’ segmentation according to their behavior. With the information on segmentation DAMIU can pay attention to the criteria for optimal market targets. DMIU can trace the large-sized segment and high consumption level for both family and non-family consumers. For Salju DAMI, the sale contribution of family consumers is very big. Therefore, straying the family segment with high consumption level will be very beneficial. The Salju sale growth on the family consumers has slowed down. This proves that there is not much increase in the number of consumers or even no growth at all. To improve the sale, it needs more than maintaining the existing consumers. Salju DAMIU must be able to increase the number of new consumers. The demographic characteristics of the target family segment are dominated by married females of 20 to 30 years of age, with S1 degree and civil servants, and their expenditure is more than 3 million rupiah per month. Furthermore, straying the non-family segment whose consumption level is also high can give a lot of benefits to Salju DAMIU. Although the non-family consumers’ contribution to Salju DAMIU sale is not big, its sale growth is bigger than the sale growth of family consumers. This shows that there is a bigger potential of the increase in sale contribution in the future. Therefore, DAMIU must also be able to maintain the existing non-family consumers, and thus acquisizing new consumers. The non-family target segment consists of restaurants with its expenditure above 25 million rupiah per month. To be able to maintain and increase new consumers, both family and non-family, it is important to pay attention to the segment target behavior. Most argue that the reason why they consume AMIU is it is cheap and it maintains the product quality produced. Therefore DAMIU needs to maintain the cheap price and its product quality. While family consumers come and buy the product by themselves and also have delivery order, all the non-family consumers make use of delivery service. Thus, the DAMIU must be able to present their best performance when dealing with consumers that come to the spot and those that prefer delivery order. Other information is concerning the sale behavior where the
181
consumers switch to other DAMIU products when the intended DAMIU is closed. Therefore, DAMIU must determine the operational time and optimal delivery time according to the consumers’ sale time. Also it must keep the availability of products to avoid consumers change their mind in terms of purchasing.
CONCLUSION AND RECOMMENDATION Conclusion Based on the behavior attribute, there are five segments of family consumers and four segments of non-family consumers. Each family segment is different in terms of usage and consumption level, where the first segment uses AMIU for drinking only, with low consumption level, the second segment uses AMIU for drinking only with high consumption level, and low consumption level and low consumption rate, the fourth segment uses AMIU for drinking and cooking with low consumption level, and the fifth segment uses AMIU for drinking and cooking with high consumption level. On the other hand, the non-family segment is different in terms of consumption and consumption level, where the first segment is new consumers with low consumption level, the second segment is new consumers with high consumption level, the third segment is old consumers with low consumption level, and the fourth segment is old consumers with high consumption level. Salju DAMIU can stray the segment with high consumption level, both the family and non-family consumers, namely the second segment and the fifth segment in the family consumers, and the second and fourth segments in the non-family consumers. DAMIU must be able to maintain the product quality produced and also maintain the price. In terms of distribution, DAMIU needs to give the best performance, whether servicing the consumers that come directly or those that ask for delivery service. They also need to determine optimal opening time and delivery time according to the consumers’ buying time. Recommendation In order to reach the DAMIU’s goal to increase sale, it is important to maintain cooperation among all parties involved, especially the workers that come directly, when servicing consumers. Further research can be carried out by discussing expectations, satisfaction, loyalty
_______________________ WORLD TECHNOLOGIES _______________________
182
and attributes that become the main considerations for consumers when deciding to buy.
REFERENCES [BPS] Badan Pusat Statistik Provinsi Sumatera Barat. 2014. Persentase Rumah Tangga di Kota Padang Berdasarkan Jenis Sumber Air Minum. Padang: Badan Pusat Statistik Provinsi Sumatera Barat. Dibb S, Stern P. 1995. Questioning the reliability of market segmentation techniques. Omega 23(6):625–636. [Dinkes] Dinas Kesehatan Kota Padang. 2014. Pertumbuhan DAMIU di Kota Padang. Padang: Dinas Kesehatan Kota Padang. Gunay GN, Baker MJ. 2011. The factors influencing consumers’ behavior on wine consumption in The Turkish Wine market. Euromed Journal of Business 6(3):324–341. Hunt SD, Arnett DB. 2004. Market segmentation strategy, competitive advantage, and public policy: grounding segmentation strategy in resource advantage theory. Australasian Marketing Journal 12(1): 7–25.
ENTREPRENEURSHIP MANAGEMENT
Istudor N, Pelau C. 2011. Clusters of consumer behavior for food and near-food products in Romania. Management and Marketing Challanges for Knowledge Society 6(4):529–542. Kotler P. 2009. Manajemen Pemasaran. Jakarta: Erlangga. Larson RB. 2004. New market groupings based on food consumption patterns. Agribusiness 20(4):417– 432. Pandey S, Rai VC. 2014. A study on factors influencing consumer behavior unorganized retailers for jabalpur district of madhya pradesh. International Journal of Retailing and Rural Business Perspectives 3(1):834-843. Piche LA, Garcia AC. 2001. Factors influencing food buying practices of grocery shoppers in London. Canadian Journal of Dietetic Practice and Research 62(4):199–202. Venkatesakumar R, Ramakumar D, Thillalirajan P. 2008. Problem recognition styles and attributes evaluation – an approach to market segmentation. ASBM Journal of Management 1(1):128–138
_______________________ WORLD TECHNOLOGIES _______________________
20
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER PURCHASE INTENTION AND SATISFACTION Dodi Iskandar*)1, Rita Nurmalina**), and Etty Riani***)
PT Asuransi Multi Artha Guna, Tbk Bank Panin Building Lt. 2, Jl. Pakuan No. 14 Baranangsiang, Bogor 16143 **) Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Campus IPB Darmaga, Bogor 16680 ***) Department of Water Resource Management, Faculty of Fisheries and Marine Sciences, Bogor Agricultural University Jl. Agatis Campus IPB, Level 3 Wing 7, Bogor 16680 *)
ABSTRACT The research was conducted at Kedai Sop Durian Lodaya (KSDL) in Bogor on February 2015. The research objectives were 1) to identify the characteristics of KSDL consumer’s behavior, 2) to analyze the factors influencing the consumer satisfaction and purchase intention of KSDL’s consumers , 3) to analyze KSDL's consumer satisfaction level and purchase intention, 4) to formulate the managerial implications in order to increase consumer satisfaction and KSDL's purchase intention. The research was conducted by using descriptive methods through case study approach. Data was collected through questionnaires with non-probability sampling technique, using convenience sampling technique. Data was analyzed by using Structural Equation Modeling (SEM). The result shows that all of the satisfaction component variabels have significantly influenced consumer satisfaction and purchase intention. In sequence, the variables having the highest influence to the lowest influence are product quality, responsiveness, assurance, empathy, reliability, tangibility, and perceived value. Keywords: consumer satisfaction, service quality, product quality, purchase intention, SEM, kedai sop durian lodaya (KSDL)
ABSTRAK Penelitian dilakukan di Kedai Sop Durian Lodaya (KSDL) di Bogor pada bulan Februari 2015. Tujuan dari penelitian ini adalah 1) mengidentifikasi karakteristik perilaku konsumen di KSDL, 2) menganalisis faktor-faktor yang mempengaruhi kepuasan dan purchase intention pada konsumen di KSDL, 3) menganalisis tingkat kepuasan dan purchase intention konsumen di KSDL, 4) merumuskan implikasi manajerial untuk meningkatkan kepuasan konsumen serta menimbulkan purchase intention konsumen di KSDL. Penelitian ini dilakukan dengan metode deskriptif melalui pendekatan studi kasus. Pengumpulan data dilakukan melalui pengisian kuesioner dengan teknik nonprobability sampling menggunakan metode convenience sampling. Data dianalisis dengan menggunakan structural equation modeling. Hasil analisis Structural Equation Modeling (SEM) menunjukkan bahwa semua variabel penyusun kepuasan berpengaruh signifikan terhadap kepuasan konsumen dan purchase intention. Secara berurutan pengaruh dari yang paling besar sampai yang terkecil adalah product quality, responsiveness, assurance, emphaty, reliability, tangible, dan perceived value. Kata kunci:
1
kepuasan konsumen, service quality, product quality, purchase intention, SEM,kedai sop durian lodaya (KSDL)
Corresponding author: Email: [email protected]
_______________________ WORLD TECHNOLOGIES _______________________
184
INTRODUCTION It is not hard to find durians in Indonesia. Because of its characteristics and easy growth in various kinds of environment, durians spread almost in all regions in Indonesia. However, the quality is different from one region to another (Rukmana, 1996). That is caused by the variation of soil nutrients in each regions. The level of durian consumption in Indonesia ranges from 1.5 kg to 2 kg per capita per year, or 3.75% to 5% of total volume of fruit consumption reaching about 40 kg per capita per year. BPS data in 2011 showed that during the period of 2002 to 2010, consumption of durian in Indonesia had increased more than 25.53% each year. In 2011, the consumption decreased by 66.67% compared to the previous year. Moreover, it had been predicted that from 2012 to 2013 the national durian consumption would fluctuate or even decline. In order to get customer interest in consuming durians, we need to do some innovations and development to the products. One of the efforts that may be able to achieve this is diversification of refined products which is made from durian. Nowadays, we can easily find various durian’s products, for instance durian surabi, durian ice, durian candy, durian bajigur, and the last is durian soup which is very popular recently. The lovers of durian soup varies from children to adults. Therefore, this business is quite promising in many regions in Indonesia, including Bogor. There are several durian soup outlets in Bogor like Sop Durian Lodaya, Sop Durian Rancamaya, Durian Medan Rafi, and Sop Durian Tegallega. It is not only sold by the durian soup outlet, but also by other food outlets. Moreover, this condition give effects on the tight competition among the durian soup owners. Competition will encourage businessmen to do better, making them different from the others, and have special attraction. Therefore, it needs an appropriate marketing mix, so that the products can be accepted by customers. According to Kotler and Armstrong (1997) marketing mix is a set of tactical marketing tools that can be controlled (product, price, distribution, and promotion) and combined by the company to produce desired response in target market. Furthermore, if it is controlled properly, it will have an impact on business development, while distribution channels needs an effective way in order to make sure that resulted product will be well received by customers. This also can become a standard that manufacturer
ENTREPRENEURSHIP MANAGEMENT
has already well serviced to customers. Product and quality service not only become the company’s goals but also consumer’s desires. Therefore, it encourages the company to improve competitiveness in terms of service to consumers by searching for the best marketing strategy. Both product quality and service quality will make consumers loyal, so that the company can understand the needs and expectations of customers and will have an impact on consumer satisfaction, which is the most critical factor in marketing priority because it will cause consumers to revisit. In addition, it can also provide positive issues about the company, and indirectly will advertise the company’s products. Therefore, the overall value of a cafe service is built by tangible aspects (food and physical facilities) and intangible aspects (employee and customer interaction). This is in accordance with the opinion of Ryu and Han (2012) stating that the right combination of tangible and intangible aspects will produce the perception of good quality service and lead to consumer satisfaction. Superior service will lead to customer satisfaction and loyalty that eventually will bring a protection of company's sales and profits. In contrast, poor service will lead to consumer dissatisfaction, so that the consumer will not only revisit, but also ask other consumers to visit other cafes (Gilbert et al., 2004; Reichheld and Sasser, 1990; Berry and Parasuraman, 1991; Bowen and Chen, 2001). Basically, the costs to get new customers is greater than to maintain existing customers (Szmigin and Bourne 1998; Berry and Parasuraman, 1991). Therefore, it is very important for a company to understand the specific needs of consumers and be able to tackle the problems. Some of the variables are studied to determine their effects on customer satisfaction, so that it can be known which variables need to be developed in order to improve customer satisfaction. Qin and Prybutok (2009) examined the aspects affecting the customer satisfaction in fast-food restaurants, the results showed that food quality, perceived value and service quality influenced the consumer satisfaction. While, Saidani’s research (2012) also showed that the quality of products and services affected the customer satisfaction. Another factor that is able to create a customer satisfaction and loyalty is affordable products price. This is in accordance with the research conducted by Consuegra et al. (2007) that says the first thing needs
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER...
to be considered in connecting between service price and loyalty is price fairness and price acceptance, so that the perceived value is in accordance with customer expectations. Based on the results of research conducted by Virlaite et al. (2009), it can be proved that there is a close relationship between the price fairness and consumer loyalty. Chiao and Bei (2001) also found similar results, that is the perception of price fairness has a positive relationship both directly and indirectly (through customer satisfaction to consumer loyalty). There is a view that consumers who are satisfied with the products and services provided are expected to re-purchase (purchase intention), try other products or services offered by the company, recommend the strength of products and services to others (positive word of mouth), and tend to be loyal to the company (Anderson et al., 1994; Andreassen and Lindestad, 1998; Naser et al., 1999). This has already been proved on Cow Head Meatballs product (Hutama, 2013), Rice Bebel Ginyo (Adiningsih, 2013), fast food (Qin and Prybutok, 2008). Based on the results of various studies, there are several factors affecting the restaurant customer satisfaction, namely the types of restaurants and consumer characteristics. The famous durian soup stall in Bogor is Kedai Sop Durian Lodaya (KSDL), located at Jl. Bangbarung, Bogor Municipality. The menu is not only durian ice, but also other menus such as a combination of green bean, durian soup and black rice, durian soup with brownies and strawberry, durian cendol ice, durian green bean porridge, and many more. The intense of competition in the field of culinary durian soup in Bogor motivates the owner of KSDL to create the stalls that become more convenient, not only a place to drink durian soup, but also a place to socialize among customers from different social levels. The opening of new branches has also been done by the owner of KSDL and now there are six branches in Bogor (Bangbarung street, Lodaya street, Pahlawan street, Siliwangi street, Gadog street, Ciomas street) and other branches located in Depok, Bekasi, Jakarta and Yogyakarta. According to the interviews with the management of KSDL, it is known that the consumer segments of KSDL consists of students, and employees whose age ranges between 15 and 30 years. The segmentation is decided by identifying the population of Bogor Municipality. Based on Central Statistics Agency (BPS, 2013), in 2012, population in Bogor was dominated by people
185
whose age ranges between 15 and 30 years, accounted for 271.580 inhabitants. An interviewee also states that the majority of consumer complaints are variation of menu, parking space, and the seats availability. Those are strengthened by the research conducted by Ramadhani in (2014), that regarding to quality services in soup durian stall XYZ, the most influential indicator in tangible variables was the availability of seats. Other results showed that the most influential indicator in product quality variable is variation of menu. Besides, the research related to particular topic has not been done in KSDL, so that in order to verify the validity of these problems, researchers need to conduct research on "The Effects of Service, Product Quality and Perceived Value on Consumer Satisfaction and Purchase Intention at Kedai Sop Durian Lodaya Bogor". The research scope is limited to KSDL consumers who have purchased the products in Bogor at least once within the last month. The research was conducted in KSDL located at Bangbarung Raya Street. The analyses results on the level of satisfaction and purchase intention eventually will be able to give some reccomendations for managerial implications that can be applied on KSDL in order to increase consumer satisfaction, especially on the factors considered to be very important for consumers. Therefore, the identification of problems in this research are : 1) what the characteristics and behavior of consumers in KSDL look like, 2) what kind of factors influence the customer satisfaction and purchase intention in KSDL, 3) how big the level of customer satisfaction and purchase intention in KSDL is, and 4) what kind of managerial implications can be given to KSDL to improve customer satisfaction and lead to purchase intention on customer. The research objectives are 1) to identify the characteristics of KSDL consumer’s behavior, 2) to analyze the factors influencing the consumer satisfaction and purchase intention of KSDL’s consumers , 3) to analyze KSDL's consumer satisfaction level and purchase intention, and 4) to formulate the managerial implications in order to increase consumer satisfaction and raise KSDL's purchase intention.
METHODS The research was conducted by using descriptive method through case study approach. Research
_______________________ WORLD TECHNOLOGIES _______________________
186
ENTREPRENEURSHIP MANAGEMENT
was carried out by field observation to analyze the company's operations, particularly in services quality, products, data collection, problems identification, alternatives and problem solving, as well as strategy and recommendations generated in terms of development and improvement in the future. Data was collected by distributing the questionnaires to 140 respondents using convenience sampling technique. The type of answer in questionnaire distributed to respondents is Likert scale with 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 = strongly agree. The variables used in this research is exogenous latent variabel (X) and endogenous variables (Y). Exogenous latent variables consist of 28 indicators, whereas endogenous variables consist of five indicators. Strutural model in the research, as follows: Yi = X1i α1 +X2iα2 + X3iα3+ X4iα4+ X5iα5+ X6i α6 + X7iα7+ ζ Satisfaction = content amount of tangibility + content amount of reliability + content amount of responsiveness + content amount of assurance +
content amount of empathy + content amount of quality + content amount of percieved value + level of error. Specification: Yi : dependent variable consumer satisfaction to – i; i: 1,2,3,4,5, .... X1i : indicator independent variable (1) α1 : the amount of indicator independent variable (1) ζ : error level that occurs in the calculation of the variable Yi Satisfaction level variable (η) is measured through the components: Y1 : Satisfied with durian soup served by KSDL Y2 : Satisfied with the services provided by KSDL Y3 : Satisfied with the facilities provided KSDL Y4 : Want to return to KSDL Y5 : Recommend KSDL to others Conceptual framework of this research can be seen in Figure 1.
Durian consumption trends
Business Development of Kedai Sop Durian in Bogor
Performance of Kedai Sop Duren Lodaya
Product qualities • Durian flavor • The taste of Sop durian • Presentation • Menu variation
Service qualities • Tangible • Reliability • Assurance • Responsiveness • Emphaty
Perceive value • Price competitiveness • Properness between price and quality • Properness between price and serving size
Durian consumption trends Consumer satisfaction Purchase intention Managerial implications
Research scope Figure 1. Conceptual framework of the research
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER...
Method used to process data is Structural Equation Modeling (SEM) by using a software (LISREL) version 8.70. KSDL consumer satisfaction level can be seen through customer satisfaction index or the Customer Satisfaction Index (CSI) with the weight of each indicator. This method uses software (SPSS) version 21.
RESULTS Demography based on Respondent Characteristics The results show that the majority of KSDL consumers are females whose age group ranges between 20 and 30 years old, and those who are less than 20 years old, and their occupation is private employees. The average monthly income of the group is between IDR 2.000.000 and IDR3.000.000 with average monthly expenditure between IDR1.000.000 and IDR2.000.000. Most of
187
KSDL consumers spend IDR50.000 to IDR75.000, in average visiting time just less than 60 minutes. Validity and Reliability Test According to Ghozali (2001), a questionnaire is considered valid if the questions are able to reveal things measured. Test of validity is done by using SPSS 21.0. The result of validity test is shown in Table 1. The tools is considered reliable if, when it is used many times in relatively similar conditions, it will generate the same data or slight variations (Supranto, 1999). The reliability level of research variables can be seen from the statistic Cronbach Alpha (α). A variable is reliable if the value of Cronbach Alpha > 0,7. The result shows that the questionnaire has met the standard in its validity and reliability in 95% of significance level, with the value of statistical significance = 0,000 and the value of Cronbach Alpha for 0,984 (cut-off value = 0,7).
Tangible
Reliability
Assurance
Responsiveness
Consumer satisfaction
Purchase intention
Emphaty
Product quality
Perceive value
Figure 2. Structural model of consumer satisfaction
_______________________ WORLD TECHNOLOGIES _______________________
188
ENTREPRENEURSHIP MANAGEMENT
Table 1. Validity Test Scale mean if item deleted
Scale variance if item deleted
Corrected itemtotal correlation
X1. Shop cleanliness X2. Employee’s appearance X3. Seat availability X4. Availability of parking lot X5. Interior design and interesting accessories X6. Interesting menu list design Reliability
111,8 111,9 112,6 113,4 112,1 111,9
426,5 424,4 417,6 421,9 425,2 423,0
0,79 0,84 0,70 0,62 0,72 0,80
X7. Accuracy of services X8. Accuracy in calculating the number of transactions X9. Ease of payment method Assurance
112,1 112,0 111,9
420,0 420,2 424,1
0,83 0,83 0,82
X10. Employee’s competence in the field of services X11. Employee response in presenting orders X12. Menu information and the prices are easy to understand X13. Employees friendliness in service X14. Employees courtesy in service Responsiveness
112,0 112,3 111,8 112,0 111,9
419,7 417,7 422,2 417,8 420,1
0,88 0,88 0,86 0,88 0,85
X15. The ability of employees in responsing the complaints X16. The willingness of employees to help consumers X17. The ability of employees in solving consumer complaints Emphaty
112,3 112,1 112,1
421,0 420,1 419,3
0,87 0,90 0,89
X18. Concern for complaints X19. Concerning of consumers needs X20. Employee’s response to apologize when there is an error Product Quality
112,1 112,1 112,2
426,7 424,3 420,4
0,81 0,81 0,86
X21. Durian aroma fitting X22. Durian flavor consistent freshness X23. The tasty combination of durian soup flavors X24. The appropriate combination of durian X25. The variety of durian soup menu Perceived Value
111,7 111,7 111,6 111,7 111,6
419,3 415,2 421,4 414,6 416,8
0,88 0,91 0,87 0,90 0,88
X26. Competitive price X27. Suitability of price with quality X28. Suitability of serving size with price Consumers Satisfaction
112,1 112,1 112,1
431,1 433,2 435,7
0,44 0,42 0,36
Y1. Satisfied with durian soup served Y2. Satisfied with the services provided Y3. Satisfied with the facilities provided Purchase Intentions
111,7 111,9 112,2
420,6 418,7 417,6
0,90 0,90 0,89
Y4. The desire to repurchase Y5. Recommend KSDL to others
111,7 111,7
418,7 417,5
0,91 0,92
Variables Tangible
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER...
189
The test of significance uses a significance level of 0,05 or 95% of confidence level. Therefore, the T value of each structural equation coefficients must be greater than 1,96. T-test value smaller than 1,96 indicates the insignificant relationship and cannot explain the latent variables that are intended by the arrows. The influences between variables can be seen by the loading factor value or load factor from SEM analysis. The value of latent variables load factor having positive values will contribute positively to customer satisfaction. This has linear relationship, meaning that the greater the value of loading factor or load factor, the greater the influence on customer satisfaction. Recapitulation of SEM processing results can be seen in Table 2.
Indicator Contributions on Responsiveness
Contributions of Service Quality, Product Quality and Perceived Value Variables on Customer Satisfaction
All of the indicators forming the variable of assurance have the T-count value above 1,96. It means that the entire indicators have significant influence on shaping the variable. Indicator of menu information and prices that are easy to understand (X12) have the biggest load factor value of 0,93 with the T-count value of 32,0. Indicators of employee’s response in presenting order (X11) have the smallest contribution to the assurance variable, with load factor of 0,85 and T-count value equal to 16,67
The dimension of service quality consists of tangibility, reliability, assurance, responsiveness, and empathy variables. The analysis shows that the overall indicator on exogenous latent variable has T- value greater than the critical value (critical value = 1,96 for alpha = 5 %). This means that all exogenous latent variables significantly affect the customer satisfaction. The detailed results can be seen in Table 3. SEM analysis results show that all satisfaction constituent variables significantly influence the customer satisfaction. In sequence, the variables having the highest influence to the lowest influence are product quality, responsiveness, assurance, empathy, reliability, tangibility, and perceived value. The results of calculations can be seen in Figure 3. Indicator Contributions on Product Quality The T-count value of all indicators forming the quality of products is above 1,96. This means that all the indicators have a significant influence on shaping the quality of products. Indicators of the variety of durian soup menu (X25) has the highest contribution because of the highest value of loading factor (0,95) and the T-count value equal to 36,40. This means that the variety of menu (X25) has the strongest influence in shaping the variable quality of products. Indicators having the smallest contribution are tasty combination of durian soup flavors (X23) with load factor value of 0,91 and T-count value accounted for 35,23. This means that the indicator has the smallest effect on shaping the quality of products.
All of the indicators forming the variable of responsiveness have the T-count value above 1,.96 meaning that the entire indicators have significant influence on shaping the variable. Indicator of variables having the greatest contribution is the ability of employees in solving consumer complaints (X17) with value of load factor is 0,94 and T-count value of 24,68. Indicator willingness of employees to help consumers has the lowest contribution (X16) with load factor of 0,92 and the T-count value equal to 27,40. Indicator Contributions on Assurance
Indicator Contributions on Emphaty All of the indicators forming the variable of empathy have T-count value above 1,96, meaning that the entire indicators have significant influence on shaping the empathy. Indicator having the highest contribution is employee’s response to apologize when there is an error (X20). The load factor value of this indicator is 0,99 and the T-count value of 31,04. The lowest contribution indicator is concerned with complaints (X18) with a load factor of 0,88 and the T-count value of 17,82. Indicator Contributions on Reliability All of the indicators have the T-count value greater than 1,.96, meaning that all variables forming the variable of reliability have significant influence on shaping the consumer satisfaction. The most influencing indicators on consumer satisfaction is accuracy in calculating the number of transactions (X8) with a load factor value of 0,94 and the T-count value of 20,19. The least influencing indicator is the accuracy of services (X7) with load factor of 0,88 and T-count value of 28,4.
_______________________ WORLD TECHNOLOGIES _______________________
190
ENTREPRENEURSHIP MANAGEMENT
Table 2. Results of SEM processing Loading factor (lambda)
The value of t
Significance
X1. Shop cleanliness X2. Employee’s appearance X3. Seat availability X4. Availability of parking spaces X5. Interior design and interesting accessories X6. Interesting menu list design Reliability
0,98 0,97 0,74 0,68 0,78 0,98
22,08 23,36 17,14 12,66 18,59 18,35
Significant Significant Significant Significant Significant Significant
X7. Accuracy of service X8. Accuracy in calculating the number of transactions X9. Ease of payment method Assurance
0,88 0,94 0,89
28,49 20,19 19,67
Significant Significant Significant
X10. Employee’s competence in the field of services X11. Employee response in presenting orders X12. Menu information and the prices are easy to understand X13. Employees friendliness in service X14. Employees courtesy in service Responsiveness
0,87 0,85 0,93 0,89 0,89
17,58 16,67 32,09 16,87 32,41
Significant Significant Significant Significant Significant
X15. The ability of employees in responsing the complaints X16. The willingness of employees to help consumers X17. The ability of employees in solving consumer complaints Emphaty
0,92 0,92 0,94
30,74 27,40 24,68
Significant Significant Significant
X18. Concern for complaints X19. Concerning of consumers needs X20. Employee’s response to apologize when there is an error Product Quality
0,88 0,89 0,99
17,82 19,38 31,04
Significant Significant Significant
X21. Durian aroma fitting X22. Durian flavor consistent freshness X23. The tasty combination of durian soup flavors X24. The appropriate combination of durian X25. The variety of durian soup menu Perceived Value
0,91 0,93 0,91 0,94 0,95
36,70 23,41 35,23 18,53 36,40
Significant Significant Significant Significant Significant
X26. Competitive price
0,93
X27. Suitability of price with the quality X28. Suitability of serving size with price Customer Satisfaction
0,88 0,79
18,77 17,64 20,13
Significant Significant Significant
Y1. Satisfied with durian soup served Y2. Satisfied with the services provided Y3. Satisfied with the facilities provided Purchase Intention
0,93 0,91 0,89
Significant 48,10 47,00
Significant Significant Significant
Y4. The desire to repurchase Y5. Recommend KSDL to others
0,98 0,97
Significant 46,11
Significant Significant
Variables Tangible
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER...
191
Table 3. Effect of an exogenous latent variables (alpha = 5%) Between variables influence Product quality ––> satisfaction Responsiveness ––> satisfaction Assurance ––> satisfaction Empathy ––> satisfaction Reliability ––> satisfaction Tangible ––> satisfaction Perceived value ––> satisfaction Consumers satisfaction ––> purchase intention Description: When the T-count> T-table (1,96) then significant influence
T-calculate 54,33 40,07 49,69 36,61 36,65 46,54 23,53 50,18
Information Significant Significant Significant Significant Significant Significant Significant Significant
Tang
Rel
Ass
CS
Resp
Emphaty
PI
Product
Value
Figure 3. Standardized loading factor models
_______________________ WORLD TECHNOLOGIES _______________________
192
ENTREPRENEURSHIP MANAGEMENT
Indicator Contributions on Tangible
Consumer Satisfaction Index (CSI)
The calculation shows that the entire indicators forming tangible variables have T-test value more than 1,96. This means that all indicators have significant influence on shaping consumer satisfaction. The indicator having the highest contribution in forming the tangible variables is Shop cleanliness (X1) with a load factor of 0,98 and the T-count value of 22,08. The lowest contribution indicator is availability of parking lot (X4) with load factor of 0,8 and the T-count value of 12,66.
In order to obtain the level of customer satisfaction in KSDL, the weighing is done to each indicator objectively. According to the processing LISREL, the result is 8,70, and the loading factor results from each indicator to the variables with variable coefficients in forming customer satisfaction
Indicator Contributions on Perceived Value All of the indicators have T-count value more than 1,96. This means that all indicators have significant influence in shaping the perceived value variables. The indicators having the highest impact on consumer satisfaction is competitive price (X26) with load factor of 0,93 and the T-count value of 18,77. The lowest influencing indicator is suitability of serving size with price (X28) with load factor of 0,93 and the T-count value of 18,77.
CSI analysis result shows that the customer satisfaction index score is 69,118%, meaning that CSI in KSDL included in satisfied category. The indicator having the highest CSI value is constituent indicator in the variable of product quality, in which the variety of durian soup menu (X25) with satisfaction level of 77,571% and satisfaction index accounted for 2,479%. The lowest satisfaction index value is the availability of parking lot (X4) on tangible variables with 41,429% of satisfaction level and satisfaction index of 0,948%. Purchase Intention
All of the indicators forming the customer satisfaction variable have the T-count value above 1,96. This means that all of the indicators have significant influence on shaping consumer satisfaction. The most influencing indicator is satisfied with durian soup served (Y1) with load factor value of 0,93 and the T-count value of 47,10. The lowest influencing indicator is satisfied with the facilities provided (Y3) with load factor of 0,89 and the T-count value equal to 47,00.
The research shows that 50,714% of respondents agree to return to KSDL and 17,142% strongly agree to come back to KSDL. Only 0,714% of respondents who do not agree and 2,857% less agree to return to KSDL, while the rest of respondents (28,571%) is neutral. It is also known that 45,714% respondents agree and 19,285% of respondents strongly agree to recommend KSDL to others. The number of respondents who are less agree to recommend only 4,285% and 30,714% of respondents are neutral. Analysis of the purchase intention also shows that all of the respondents agree to recommend KSDL to others. Therefore, KSDL has already had loyal customers, and thus they can be called as customers of KSDL.
Indicator Contributions on Purchase Intention
Managerial Implications
All of the indicators forming the variable of purchase intention have significant influence. It can be seen from the T-count value above 1,96. The most influencing indicator is desire to repurchase (Y4) with a load factor of 0,98 and the T-count value of 47,00. Indicator of recommend KSDL to others (Y5) has small effect, with load factor value of 0,97 and the T-count value of 46,11.
The main variable that is the most influencing in shaping consumer satisfaction is product quality. On the other hand, the most influencing indicator in shaping product quality variable is the variety of durian soup menu (X25). Therefore, the change of menu variety should be concerned by KSDL management. The addition of durian soup combination with various types of suitable ingredients is also needed. Besides, KSDL management can also provide a special menu, different from the main menu that has been provided, in which it is chosen by the consumers. These will give positive impacts. First of all, the consumers will enjoy their
Indicator Contributions on Customer Satisfaction
_______________________ WORLD TECHNOLOGIES _______________________
THE EFFECT OF SERVICE, PRODUCT QUALITY, AND PERCEIVED VALUE ON CUSTOMER...
own combinations. Secondly, it will also positively give an impact on the management, for example the management can do research related to the variety of menu. Management still can do the research in terms of the increase of menu’s variety by involving consumers. It means that consumers will still keep paying for their own menu’s whether it is delicious or not. Another advantage is creating new menu variations derived from the most frequent combination menu created by consumers. However, management has to evaluate the new menu in order to keep the taste. By increasing the menu’s variety, it is expected that revisiting level to KSDL will increase as well. Besides, KSDL also need to add other main courses apart from durian ingredients, so that consumers can still be served if they want to order other kinds of foods. Another indicator that should be considered in the variable of tangibility is the availability of parking lot (X4), because it has the lowest CSI value among all of the constituent indicators of satisfaction variable. The parking space provided by KSDL is very narrow, so the management should expand parking lot in order to increase customer satisfaction. According to the research result, the seats availability (X3) has the second lowest CSI value after the availability of parking lot (X4). Therefore, it should be considered by management through the addition of seats capacity. Moreover, it is hoped that the number of queues will decrease significantly and consumers’ convenience will increase.
CONCLUSION AND RECOMMENDATIONS Conclussion The results show that the majority of KSDL consumers is females whose age group ranges between 20 and 30 years old and those who are less than 20 years old, and their occupation is private employees. The average monthly income of the group is between IDR2.000.000 to IDR3.000.000 with average monthly expenditure between IDR1.000.000 to IDR2.000.000. Most of KSDL consumers spend IDR50.000 to IDR75.000 with average visiting time in just less than 60 minutes. According to consumers purchasing behaviour, most of KSDL consumers have never visited to other durian soup stalls.
193
SEM analysis results show that all satisfaction constituent variables significantly influence the customer satisfaction. In sequence, the variables having the highest influence to the lowest influence are product quality, responsiveness, assurance, empathy, reliability, tangibility, and perceived value. It is different from the research conducted by Febriana and Aryani in 2010 which showed the sequence of variables from the strongest influence to the weakest, namely reliability, responsiveness, assurence, empathy, and tangibility. The CSI results show that the level of consumer satisfaction in KSDL is 69,118% and included in satisfied category. The significant influence of customer satisfaction on the purchase intention will be able to increase the consumer satisfaction level. It can be seen from the consumer's willingness to repurchase and to recommend KSDL to others. Recommendations Some suggestions that can be used as a reference for subsequent scientific writings related to the consumer satisfaction are as follows: (1) further research should be conducted by adding the number of variables derived from other theories, such as the use of 7P in marketing (product , price, place, promotion, people, process, and physical evidence), so that it will be able to broaden the results scope and strengthen the research results. (2) KSDL management should increase the variety of menu by combining the various flavors, extend the parking lot, and increase seats capacity.
REFERENCES Adiningsih PK. 2013. Analisis kepuasan dan loyalitas konsumen restoran nasi bebek ginyo di Jakarta [tesis]. Bogor: Institut Pertanian Bogor. Andreassen TW, Lindestad B. 1998. Customer loyalty and complex services. International Journal Of Service Industry Management 9(1):7–23. Aryani D, Febrina R. 2010. Pengaruh kualitas Layanan terhadap kepuasan pelanggan dalam membentuk loyalitas pelanggan. Jurnal Ilmu Administrasi dan Organisasi 17(2):114–126. Bei LT, Chiao YC. 2001. An integrated model for the effects of perceived product, perceived service quality, and perceived price fairness on consumer satisfaction and loyalty. Journal of Consumer Satisfaction, Dissatisfaction and Complaining Behavior 14:126–140.
_______________________ WORLD TECHNOLOGIES _______________________
194
Berry LL, Parasuraman, A. 1991. Marketing Services: Competing Through Quality. New York: Free Press. Badan Pusat Statistik. 2012. Tingkat Konsumsi Durian di Indonesia 2011. Jakarta: BPS. Badan Pusat Statistik. 2013. Jumlah Penduduk Kota Bogor 2012. Jakarta: BPS. Bowen JT, Chen S. 2001. The relationship between customer loyalty and customer satisfaction. International Journal of Contemporary Hospitality Management 13(5): 213–217. Consuegra D, Molina A, Esteban À. 2007. An integrated model of price, satisfaction and loyalty: an empirical analysis in service sector. Journal of Product & Brand management 16(7): 459–468. Ghozali I. 2001. Aplikasi Analisis Multivariate Dengan Program SPSS. Semarang: Badan Penerbit Universitas Diponegoro. Gilbert GR, Veloutsou C, Goode MMH, Mountinho L. 2004. Measuring customer satisfaction in the fast food industry: a cross national approach. Journal of Services Marketing 18(5): 371–383. Hutama PE. 2013. Analisis kepuasan dan loyalitas konsumen bakso kepala sapi (pada gerai di Wilayah Cibubur) [tesis]. Bogor: Institut Pertanian Bogor. Ikhwan. 2014. Interview of Sop Durian Lodaya History. Bogor: Sop Durian Lodaya. Kotler P, Amstrong G. 1997. Principles of Marketing. New Jersey: Prentice Hall. Naser K, Jamal A, Khatib K. 1999. Islamic banking: a study of customer satisfaction and perferences in Jordan. International Journal of Banking Marketing 17(3): 135–150. Qin H, Prybutok RV. 2008. Determinants of customer perceived service quality in fast food restaurant
ENTREPRENEURSHIP MANAGEMENT
and their relationship to customer satisfaction and purchase intentions. The Quality Management Journal 15(2): 35. Qin H, Prybutok RV. 2009. Service quality, customer satisfaction and purchase intention in fast food restaurant. International Journal of Quality and Service Sciences 1(1): 78–95. Ramadhani HS. 2014. Pengaruh product quality, service quality dan perceived value terhadap kepuasan dan loyalitas konsumen Sop Durian XYZ [tesis]. Bogor: Institut Pertanian Bogor. Reichheld F, Sasser WE. 1990. Zero defections: quality comes to service. Harvard Business Review 68(5): 105–11. Rukmana R. 1996. Durian Budidaya dan Pascapanen. Yogyakarta:Kanisius. Ryu K, Han H. 2012. Influence of the quality of food, service, and physical environment on customer satisfaction and purchase intention in quick casual restaurants: moderating role of perceived price. International Journal of Contemporary Hospitality Management 24(2): 200–223. Saidani B. 2012. Pengaruh kualitas produk dan kualitas layanan terhadap kepuasan konsumen dan minat beli pada ranch market. Jurnal Riset Manajemen Sains Indonesia 3(1): 1–22. Supranto. 1999. Analisis Multivariat. Jakarta: Rineka Cipta. Szmigin M, Bourne. 1998. Customer equity in relationship marketing. Journal of Consumers Marketing 15(6): 544–557. Viralaite R, Saladiene V, Skindaras D. 2009. The relationship between price and loyalty in services industry. Inzinerine Ekonimika-Engineering Economics 3:94–104.
_______________________ WORLD TECHNOLOGIES _______________________
EFFICIENCY of RAW MATERIAL INVENTORIES IN IMPROVING SUPPLY CHAIN PERFORMANCE of CV. FIVA FOOD
21
Artadi Nugraha*)1, Sukardi**), and Amzul Rifin***) School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Agroindustrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University PO BOX 220, Campus IPB Dramaga, Bogor 16602 ***) Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Campus IPB Dramaga, Bogor 16680 *)
ABSTRACT The production and number of processed food industries have slightly increased; as a result, the companies must compete to maximize their profits by conducting their efficient production process. CV. Fiva Food is one of the companies in the field of processed foods, especially in processed meat that has implemented supply chain management. It is necessary for the company to take measurements of its performance and efficiency for the entire supply chain such as procurement of raw materials. The purposes of this study were to analyze the performance of the company's supply chain and determine the most efficient method of procurement for its raw materials as well as and to provide recommendations for the company to improve its performance of entire supply chain. This study used SCOR in analyzing the performance of supply chain and EOQ and POQ method to be compared with the method that the company uses to determine which method of procurement for raw materials is the most efficient one. The result showed that based on the matrix, the company's performance is unfavorable when it was compared to the benchmark performance of inventory days of supply. In addition, this study showed that the POQ method produces the lowest total inventory cost with savings of Rp6.647.015 for raw materials of MDM whereas EOQ method produced the lowest total inventory cost with savings of Rp222.153,78 for raw materials of FQ85CL. Keywords: performance suppy chain, SCOR, fiva food, EOQ, POQ
ABSTRAK Peningkatan produksi dan jumlah industri makanan olahan menyebabkan perusahaan saling bersaing dalam memaksimumkan keuntungan mereka dengan cara melakukan efisiensi terhadap proses produksinya. CV. Fiva Food merupakan salah satu perusahaan di bidang makanan olahan khususnya olahan daging yang telah lama menerapkan manajemen rantai pasok. Perusahaan perlu melakukan pengukuran terhadap kinerja dan efisiensi rantai pasoknya yaitu pengadaan bahan baku. Tujuan penelitian ini adalah menganalisis kinerja rantai pasok perusahaan dan menentukan metode pengadaan bahan baku yang paling efisien bagi perusahaan, serta memberikan rekomendasi bagi perusahaan dalam meningkatkan kinerja rantai pasoknya. Penelitian menggunakan metode SCOR untuk menganalisis kinerja rantai pasok, metode EOQ, dan metode POQ yang dibandingkan dengan metode perusahaan untuk mengetahui metode pengadaan bahan baku yang paling efisien. Hasil penelitian menunjukkan bahwa terdapat matriks kinerja perusahaan yang menunjukkan hasil yang kurang baik apabila dibandingkan dengan benchmark yaitu kinerja inventory days of supply (jumlah hari sediaan pasokan). Disamping itu, metode POQ menghasilkan total biaya sediaan terendah dengan penghematan sebesar Rp6.647.015 untuk bahan baku MDM, sedangkan untuk bahan baku FQ85CL metode EOQ menghasilkan total biaya sediaan terendah dengan penghematan sebesar Rp222.153,78. Kata kunci: kinerja rantai pasok, SCOR, fiva food, EOQ, POQ
1
Corresponding author: Email: [email protected]
_______________________ WORLD TECHNOLOGIES _______________________
196
INTRODUCTION Food and beverage industry is one of the strategic industries that give a major contribution to Gross Domestic Product (GDP) in the first quarter of 2014 with the amount of 23,56%. The Central Bureau of Statistics (2014) states that there was growth in food production throughout the quarter 1 of 2014 by 9%. This growth increased if compared to the production of food in the quarter 1 of 2013 by 0,3%. Meat processing industry is one of the food industry subsectors that has experienced increased competition in terms of both quality and quantity. Agrina (2014) stated that the increase was a result of growth in meat consumption in Indonesia where the consumption of poultry meat in the country increased from 4,99 kg/capita/year by 2010 to 6,28 kg, 6,97 kg, 8,08 kg from 2011 to 2013 successively, and it was predicted to reach 9,15 kg/ capita/year in 2014. In addition, the consumption of beef in 2013 amounted to 2,1 kg/capita/year. One of the efforts made by the company in the face of the competition is to increase the performance of supply chain management so that it becomes effective and efficient. Supply chain management (SCM) is an integration of key business processes from an end user through an original supplier that provides products, services, and information that add value for customers and other stakeholders (Chan and Qi, 2003). CV. Fiva Food is one of the food sub-sector companies engaged in the meat processing industry which has been registered as a member of the National Meat Processor Association (NAMPA) and has already obtained a halal certification issued by BPOM-MUI and has implemented the supply chain management. To measure the performance of its supply chain management, CV. Fiva Food requires a performance measurement system that can assists the company in evaluating its performance in achieving its target. One measurement model that can be used in measuring the performance of supply chain management is a model of Supply Chain Operations Reference (SCOR). Irfan, Xiaofei and Seng Chun (2008) explained that the supply chain management system business application process, sustainability, and practices can be obtained from SCOR. SCOR Model allows companies to communicate, compare and learn from their competitors both from the similar and different types of companies. Chopra and Meindl (2007) state that the supply chain management performance is determined by several factors, namely, preparation, transportation, facilities and information. Fleisch and Tellkamp (2005) argue
ENTREPRENEURSHIP MANAGEMENT
that there are several reasons why the supply record is inaccurate, and some of the reasons include mis-delivery of goods coming in and going out of the company, errors in transactions, and errors in goods placements. Lorentz (2008) mentions that the lack of quality supply of raw materials, especially in the processing of meat and milk, is a significant problem in the food processing industry. Khalid (2008) in his research suggests that the management of the supply in the manufacturing industry needs to gain attention and critical reviews in order to avoid interruption of the production process and improve operating performance. Rajeev (2008) states inaccuracy in the supply costs causes productivity loss, potential loss due to the inability to meet customer demand, and frustration which causes a direct impact on the company's financial strength and competitive advantage. Based on the results of these studies, it is known that one way of improving the company’s supply chain performance is to conduct an efficient inventory process. Total cost of supply is determined based on costs of order and storage. The data shown in the data of one of the main raw materials in CV. Fiva Food is mechanical debone meat (MDM) show that the total number of orders in a year made by the company reached 68 orders. In addition, the average amount of the rest of storage from the production process is also reasonably great i.e. 3,5 tons. Value of the excessive supply can cause excessive spending on the company, thus reducing the company's profit, while lack of supply can have an impact on the inhibition of the production process, thus reducing the sales performance which leads to the risk of losing consumers and customers. Therefore, there should be an analysis on the company's raw material supply so that the preparation of the raw materials can be more efficient. In regards to the related to the issues presented, the objectives of the research were to analyze the performance of supply chain management currently carried out by the company, to identify the most efficient method of procurement of raw materials conducted by the company i.e. EOQ method, POQ method and company method, and to provide alternative solutions for controlling the supply of raw materials efficiently. This study was limited to the scope of the data of order, inventory and raw material supply used starting from October 2013 to September 2014, and the observed raw materials were limited to those belonging to class A in the ABC classification and measurement of supply chain performance using SCOR approach focused on the level 1 matrix.
_______________________ WORLD TECHNOLOGIES _______________________
EFFICIENCY OF RAW MATERIAL INVENTORIES IN IMPROVING SUPPLY CHAIN PERFORMANCE...
METHOD The primary data were collected from the interviews, direct observations and questionnaires distributed to the general manager, production and operation managers, distributors, and agents of CV. Fiva Food. Technique sampling was done by purposive sampling on the basis that the respondents have the experience, expertise and competence so that they were considered to be the representatives in responding the questions in the questionnaire. Interviews were conducted to obtain information and data related to supply chains in the company, among others, the amount of production and sales, amount of supply and distribution as well as partnerships between suppliers and distributors. This technique was supported by the filling out the questionnaire and field survey to obtain a picture of the implementation of the company supply chain. Direct observations were carried out to determine the condition of the company including mechanisms of raw material procurement, production process flow, and product distribution mechanism. Literature studies provide theoretical information as the reference to achieve the expected goals. The secondary data collection was based on company reports, data preparation and use of raw materials starting from October 2013 to September 2014. The raw material data used in this research were the primary raw materials commonly used in the production process by the company, namely, mechanical debone meat (MDM) and fore quarter chemical lean (FQ85CL). Matrix Calculation of SCOR Performance A number of frameworks and models for performance measurement have been developed since 1980s (Bititci et al., 2000). Gomes et al. (2004) suggested that performance measurement evolved through two stages where the first phase began in the late 1880s, and the second phase began in the late 1980s. According to Melynk et al. (2004), a performance measurement system usually contains: i) individual matrixes; ii) a series of performance matrixes, and iii) a comprehensive performance measurement system. Cagnazzo et al. (2010) classifies the basic grouping of performance measurement systems into five models, namely: (1) Balanced Models, (2) Quality Models, (3) Qestionnairebased Models, (4) Hierarchical Models and (5) Support Models. There are 12 matrix performances as parts of the SCOR model to measure the performance process
197
which is classified into: (i) Delivery reliability; (ii) flexybility and responsiveness; (iii) Costs; and (iv) Asset (Huan et al. 2004). The parameters measured based on attributes as the performance matrix are as follows: a. Perfect Order Fulfillment (POF) POF is the percentage of orders delivered completely and on time in accordance with customer demand and the delivered goods have no quality problem. The following is the formula to determine the value of POF: Total Orders Perfect Total Orders
b. Order Fulfillment Cycle Time (OFCT) OFC is the number of days (time) required from the day when the order is received to the day when the product is received by customers. In determining the OFCT value, the average number of days required in the delivery of products to customers can be measured. The following is the formula to determine the value of OFCT: The actual number of cycle time for all orders sent (days) Total number of orders sent (days)
Analysis of ABC Classification According to Gaspersz (1998), there are several stages in the analysis according to the ABC classification: 1). Determining the volume per time period inventory for the classified materials 2). Calculating the total inventory cost per time period by multiplying the volume of inventory at a cost per unit. 3). Calculating the total value of the aggregate inventory of all ingredients. 4). Registering these materials in the ranking of the percentage of the total inventory cost from the largest to smallest amount. 5). Classifying these materials into groups of A, B or C. The use of software POM-QM two versions can also be used to help classify the raw materials into classes of A, B and C. The ABC analysis with software POM-QM can be used by: 1). Clicking and selecting Inventory Module, File, New and ABC Analysis; 2). Entering a title in the Title column and then click OK; 3). Filling in the data in accordance with the data of raw materials owned; and 4). Clicking Solve to see the results of the calculation.
_______________________ WORLD TECHNOLOGIES _______________________
198
ENTREPRENEURSHIP MANAGEMENT
Raw Material Procurement Analysis Data processing for controlling the supply of raw materials was conducted by using EOQ and POQ methods. Maisuriya and Bhatwala (2013) used EOQ method in their research as quantity controller and total cost per unit in which the main objective of the study was to produce a model that could maximize profits. Before performing the analysis, it is necessary to firstly estimate the preparation cost consisting of order and storage costs by collecting and classifying the components of the storage and order costs in order to get the total cost of raw material supply. 1. The formula to calculate order costs is as follows: Oc = SD/Q Description: Oc = Order cost of raw materials per period S = Order cost of raw materials per order in rupiah D = Usage or demand estimated per time period Q = Number of ordersin units 2. The formula to calculate storage cost is as follows: Ch = HQ/2 Description : Ch = Total storage cost of raw materials per period Q / 2 = Average level of inventory H = Storage cost per unit per period in rupiah Total cost of preparation is as follows: TC = Oc + Ch 3. The formula to calculate inventory control of EOQ method is as follows: a. Determination of Optimum Quantity
b. ROP determination without safety preparations ROP = d x L
4. The formula to calculate inventory control of POQ method is as follows: a. Interval order determination
b. Inventory target determination Rpoq = dt+L + ZαδdtL Description: D : Demand per period H : Storage Cost L : Lead Time Zα : Safety Factor S : Order Cost d : Daily demand R : Average demand δd : Standard deviation of demand
RESULTS
Supply Chain Model of CV. Fiva Food CV. Fiva Food, in running its production operations (Figure 1), implements supply chain involving various stages from the supplier to the customer chain. The supply chain line is the order process line from raw materials to finished goods. In meeting the needs of its main raw materials in the production process of MDM and FQ85CL, it requires multiple suppliers. This is because the company cannot produce its own raw materials, and resources are limited, and it implements its stock production system of make to stock. Performance System
Measurement
of
Supply
Chain
Tangen (2004) argues that performance is defined as the efficiency and effectiveness of an action. There are five performance attributes that are used in supply chain performance measurement using the SCOR method including supply chains of reliability, responsiveness, flexibility, costs, and assets. Each performance attribute has its own measurement method i.e. perfect order fulfillment for the reliability performance attribute, order fulfillment cycle time for the responsiveness performance attribute of the supply chain, flexibility of each supplier for the flexibility performance attribute of supply chain, inventory cost for the performance
_______________________ WORLD TECHNOLOGIES _______________________
EFFICIENCY OF RAW MATERIAL INVENTORIES IN IMPROVING SUPPLY CHAIN PERFORMANCE...
attribute of supply chain cost as well as cash to cash cycle and inventory days of supply for performance attribute of supply chain assets. The results of performance measurement of supply chain companies based on external and internal measurements using SCOR methods can be seen in Table 1. The measurement results showed that the value inventory days of supply for MDM raw materials is 67 days and above the average benchmark value. Nevertheless, the value is not equal or exceeds the best benchmark value in its class that is 55 days, whereas for FQ85CL raw materials, the value of inventory days of supply is 88 days in which the value is worse when compared with the target of an average benchmark in its class that is 84 days. These results indicate that there are excessive inventories for FQ85CL raw materials. These excessive raw materials resulted in rising storage costs incurred by the company so that it reduced its profits earned. Waller, Nachtmann, and Hunter (2006) show that the fate of a company depends on its ability to manageits inventories. The effectiveness of supply chain management has various advantages including an increase in customer value, increased profitability, reduced cycle time, better average level of inventories and better product designs (William et al. 2007). Analysis of ABC Classification ABC classification analysis is an analytical tool that is used for companies to classify supply based on their level of importance. The product cost is the deciding factor used in the classification of the ABC analysis. The product cost is obtained by multiplying the amount of demand for raw materials at a price per unit. The ABC
Supplier
CV. Fiva Food
199
analysis result using POM-QM software showed that there are two raw materials with the highest inventory value with the cumulative percentage of 67,36% i.e. fore quarter (FQ85CL) (54,251%) and mechanical deboned meat (MDM) (13,111%) with the percentage of usage included in class A. Analysis of Raw Material Supply Order cost is a fee that is required each time the supply is made by the company. Storage cost is a cost that must be incurred by the company in the process of storage of raw materials. In its main procurement of raw material i.e. MDM and FQ85CL, the company places an order in accordance with the number of orders required, in which the quantity of MDM raw materials supply is as much as 2.405 kg for one time order and that of FQ85CL raw materials is as much as 2.047 kg for onetime order. By the quantity of the order, in one period the company places 68 times and 39 times of orders for MDM raw materials and FQ85CL raw materials respectively (Table 2). Calculation of inventory using EOQ method was analyzed using POM-QM software for windows second version (Production and Operations Management, Quantitive Methods). The optimal quantity of raw materials MDM is as much as 9.252 kg, while the quantity of optimal order for FQ85CL raw materials is as much as 1.126 kg. By knowing the optimal quantity, the number of estimated orders can be calculated by dividing the usage value of D and optimum Q. The calculations showed that the number of orders for MDM iraw materials is as much as 18 orders per year.
Catering
End user
Swalayan
End user
Retail
End user
Agent/shop
End user
End user
Picture 1. Supply chain model of CV. Fiva Food
_______________________ WORLD TECHNOLOGIES _______________________
200
ENTREPRENEURSHIP MANAGEMENT
Table 1. Matrix card of SCOR level 1 in CV. Fiva Food Level 1 matrix
Performance attribute of supply chain Reliability Responsiveness Flexibility
Perfect order fulfillment Order fulfillment cycle Flexibility of supply chain
Cost
Inventory Cost
Assets
Inventory Days of Supply Cash to Cash Cycle
Actual (a)
MDM Suppliers FQ85CL Distribution Channel MDM FQ85CL MDM FQ85CL MDM FQ85CL
90,1% 4 days 99% 99% 99% Rp2.384.201.105 Rp4.790.987.669 67 days 88 days 67 days 72 days
Best in class (b) 92,4 % 1,8 99% 99% 99% N/A N/A
Average (c) 65,7 % 4 N/A N/A N/A N/A N/A
55 days
84 days
35,6 days
99,4 days
Description: N/A = not applicable Sources: 1. (a) The processed result at Fiva Food 2. (b) and (c) supply chain council, as quoted by Sidarto (2008), Purnamasari (2011)
Table 2. Companies method of raw material supply Variables Usage (D) (Kg) Order cost (S) Storage cost (H) Order quantity (Kg) Total order
MDM 163.534 Rp178.500 Rp682 2.405 68
FQ85CL 79.826 Rp8.500 Rp1.071 2.047 39
As many as 71 orders for FQ85CL raw materials are placed per year. Order quantity period method is a method that is performed at the fixed order interval and allows the size of orders size to vary according to the economic order interval obtained (Henmaidi and Heryseptemberiza, 2007). In determining the interval time of order or economic order interval, EOQ should be used as the basis. Economic order interval value can beobtained by dividing the EOQ with the monthly average requirement. EOQ value of MDM raw materials is 9.252 kg, whereas the EOQ value for the raw materials of FQ85CL is 1.126 kg. Results of calculation of economic order interval (EOI) for MDM raw materials is 0,68 months with the interval of 15 days once the company places an order, while the value of EOI for FQ85Cl raw materials is 0,17 month or one order for every week with an order interval of FQ85CL raw materials of four days. When compared with the number of orders that has been made by the company, EOQ method produces fewer orders for MDM raw materials, but it has a more frequent order for FQ85CL raw materials. The large number of orders in the period is due to the quantity of booked orders; in addition, it is also caused by the order and storage costs of raw
materials. The less frequency of orders made by using EOQ and POQ methods is due to the quantity of orders made using both methods where the quantity is also much greater compared to that made by the company. Table 3 shows that the optimal quantity in a single order for MDM raw materials using the EOQ method amounted to 9.252 kg; on the other hand, the optimal quantity is 9.085 kg using the POQ method. The opposite is shown in FQ85CL raw materials, where the quantity of an order made using the EOQ and POQ methods is less when compared to the quantity of an order made by the company. Result of calculation of reorder point (ROP) shows that the company needs to do a reorder for MDM raw materials to the supplier when the inventory is as much as 1,887 kg and reorder for FQ85CL raw materials when the inventory is as much as 921 kg. Comparison of Inventory Total Cost among the Three Methods Total cost of inventory is the result of the sum of the order, storage and product cost. The results shown in Table 4 show that the total storage for MDM raw materials using POQ method generates a total cost of inventory of Rp2.377.553.985 and provides inventory cost saving of Rp6.647.015 or by 51,29% when compared with the results using the company method, whereas the use of POQ method on FQ85CL raw materials generates inventory total cost of Rp4.790.766.881 and provides inventory cost saving by Rp220.819 when compared with the results using the method performed
_______________________ WORLD TECHNOLOGIES _______________________
EFFICIENCY OF RAW MATERIAL INVENTORIES IN IMPROVING SUPPLY CHAIN PERFORMANCE...
by the company. Nevertheless, the EOQ and POQ methods on MDM raw materials when adjusted with a storage capacity of raw materials in the company cannot be applied because the storage capacity of the main raw materials (especially meat) only amounted to seven tons. If the company wants to apply POQ or EOQ methods, the company needs to add the storage
201
capacity, and calculation of order and storage cost variables to determine the optimum order quantity have to be carried out. In addition, if the company cannot add storage capacity for its raw materials, the EOQ and POQ methods can still be applied but an adjustment with a storage capacity of its raw materials must be conducted.
Table 3. Comparison among the methods of POQ and EOQ and the company (Q*) Company (Kg) Total Orders by the company method (Q*) EOQ (Kg) Total Orders by the EOQ method (Q*) EOQ with the adjustment with the warehouse capacity (Kg) Total Orders by the EOQ method with the adjustment with the warehouse capacity (Q*) POQ (Kg) Total Orders by the POQ method (Q*) POQ with the adjustment with the warehouse capacity (Kg) Total Orders by the POQ method with the adjustment with the warehouse capacity
MDM 2.405 68 9.252 18 4.626 36 9.058 18 4.543 36
FQ85CL 2.047 39 1.126 71 1.222 65 -
Table 4. Comparison of supply total costs among the three methods
Cost of company method order Cost of company method storage Cost of Products Total cost Cost of EOQ method order Cost of EOQ method storage Cost of Products Cost discrepancy of EOQ and company Cost of EOQ method order by the adjustment with the warehouse capacity Cost of EOQ method storage by the adjustment with the warehouse capacity Cost of Products Cost discrepancy of the company method Cost of POQ method order Cost of POQ method storage Cost of Products Total cost Discrepancy between POQ company Cost of POQ method order by the adjustment with the warehouse capacity Cost of POQ method storage by the adjustment with the warehouse capacity Cost of Products Cost discrepancy of the company method
MDM (Thousand Rp) 12.138,00 820,10 2.371.243,00 2.384.201,00 3.213,00 3.155,00 2.371.243,00 6.590,00 6.426,00 1.577,50 2.371.243,00 4.954,60 3.213,00 3.097,98 2.371.243,00 2.377.553,98 6.647,02 6.426,00 1.549,02 2.371.243,00 4.982,98
FQ85CL (Thousand Rp) 331,50 1.096.10 4.789.560,00 4.790.987,70 602,73 602,78 4.789.560,00 222,15 552,50 654,38 4.789.560,00 4.790.766,88 220,82 -
_______________________ WORLD TECHNOLOGIES _______________________
202
ENTREPRENEURSHIP MANAGEMENT
Adjustment with a storage capacity of raw materials using EOQ method gives the total inventory cost savings on MDM raw materials is Rp4.954.639 or 38,23% with an order frequency as much as 36 times a year, whereas the use of POQ methods with adjustment capacity provides a total cost savings of preparation of Rp4.982.975 or 38,45% and also booked for 36 times a year. The results of inventory control using the POQ and EOQ methods are consistent with the research conducted by Permana (2011) who analyzed alternative models of raw material procurement that can lower the total cost of the inventory to support the supply chain performance in PT Hadinata Brothers using the lot sizing method with four different techniques i.e. lot for lot, Economic Order Quantity (EOQ), Period Order Quantity (POQ), and Part Period Balancing (PPB). The results showed that POQ technique produces the lowest total cost for inventory for plywood materials and generates savings up to 11,44%, while LFL produces the lowest total cost of inventory for MDF raw materials and produces savings of 30% compared to that using the company method. These results are also consistent with the study conducted by Mathew (2013 where he also used EOQ method as a forecasting model for controlling the raw material inventories in retail companies, in which the forecasting model of inventory management previously made by the company caused inaccurate supply levels. The results showed that by controlling inventories using EOQ method can reduce the total storage cost as much as 20% compared with that using by the company method.
Comparison of Number of End Stocks among the Three Methods Total purchase of MDM raw materials using EOQ method is greater compared with that using the company method. Based on the amount of purchase and average usage of MDM raw materials which amounted to 13,63 tons, the amount of end stocks reaches up to approximately 4,74 tons on average (Table 5). This end stock value produces a larger quantity when compared to the method performed by the company. This final larger stock quantity is the result of the addition of the larger amount of purchase for each order made using EOQ method; however, the frequency of purchase is less than before i.e. 18 times. The addition of the mount of the end stock does not significantly affect the total cost of inventories undertaken by the company using EOQ method. This is because the cost of purchasing raw materials using EOQ method is also less than that made by the company in a year in which the purchases of raw materials reach 68 times. Based on the usage amount of FQ85CL raw materials up to 79,83 tons in a year, the average monthly end stock amount of FQ85CL raw materials of 2,25 tons can be obtained, and this value of the end stock amount is greater compared that using the method performed by the company. Similar result was also obtained with the use of POQ method on MDM raw materials in which the average end stock value is greater when compared to that using the company methods, where the average end stock of each month reaches 5,45 tons. Different result was obtained from FQ85CL raw materials where the average end stock value gained is less compared with that of the company method and EOQ method that is 1,90 tonnes per month. These results indicate that POQ method can provide better cost saving and storage on FQ85CL raw materials.
Table 5. Comparison of supply total costs among the three methods
Baseline stock (Ton) Total purchase (Ton) Monthly average Total inventory (Ton) Monthly average End stock (Ton) Monthly stock average
Company method MDM FQ85CL 2,00 2,90 163,49 79,42 13,62 6,62 163,53 79,83 13,63 6,65 1,95 2,49 3,50 2,23
EOQ method MDM FQ85CL 2,00 2,90 166,54 79,95 13,88 6,66 163,53 79,83 13,63 6,65 5,00 3,02 4,74 2,25
POQ method MDM FQ85CL 2,00 2,90 163,53 79,43 13,63 6,62 163,53 79,83 13,63 6,65 1,99 2,50 5,45 1,90
_______________________ WORLD TECHNOLOGIES _______________________
EFFICIENCY OF RAW MATERIAL INVENTORIES IN IMPROVING SUPPLY CHAIN PERFORMANCE...
Managerial Implication Supply chain performance in CV. Fiva Food shows good results because the company has achieved several benchmark targets. A number of the performance targets needs to be improved by the company include the perfect order fulfillment order and inventory days of supply, and this will support the future performance of the company's order fulfillment order up to 100%. One way that can be carried out by the company in improving the delivery performance is by the delivery timing; i.e. in the morning as well as the well-routed delivery (selection of smooth and good road conditions) which can help the company to reduce delays and maintain quality of the goods to be shipped. In the process of procurement of raw materials, the company needs to conduct ABC analysis in advance to determine which raw materials are prioritized in controlling supplies. There are several methods that can be used by the company as an alternative to control raw materials including EOQ and POQ methods. Both methods can be considered to be an alternative method in the control of raw materials, for those have been proven to deliver cost-savings for supplies. The high order cost of MDM raw materials occurred because the supplier did not deliver the product; therefore, it is necessary for the company to seek alternative suppliers of MDM raw materials so that delivery costs can be reduced in terms of transportation. Alternative MDM raw material suppliers chosen by the company also needs to meet the criteria of quality and quantity required by the company. In addition, to further maximize the profit, the company needs to improve its marketing areas as well as to increase its production capacity.
CONCLUSIONS AND RECOMMENDATIONS Conclusions The performance of the company supply chain analyzed using SCOR method based on the performance attributes of the order complete fulfillment, order fulfillment cycle, supply chain flexibility as well as cash to cash cycle showed good results. The performance of the company's assets viewed through inventory days of supply shows that there are still raw materials which are less economical because their values exceed the benchmark; therefore, it is necessary to conduct analysis on raw material control.
203
The results of the comparison of the total supply cost among the methods of the company, EOQ and POQ showed that the POQ supply method produces the lowest total cost with savings of Rp6.647.015 for MDM raw materials. For FQ85CL raw materials, EOQ method produces the lowest total supply costs with savings of Rp222.153,78. The results of the analysis also showed that the optimum number of orders using the EOQ analysis for MDM raw materials is equals to 9.252 kg in which the adjustment to the company warehouse capacity is 4.626 kg while for the optimum quantity of FQ85CL raw materials is 1.126 kg. The reorder point with EOQ method for MDM raw materials is 1.887 kg whereas for FQ85CL raw materials it is 921 kg. To improve the performance of the supply chain in controlling raw materials, the company needs to keep continous and detailed records of raw materials because they are useful to identify the re-order point and optimum quantity order. Furthermore, alternative selections of MDM raw material suppliers are expected to meet the necessary criteria for the company to reduce order costs. Recommendations In controlling raw material supplies, the company can apply the ABC analysis to help determine which materials should be prioritized. In addition, there should be continuous and detailed data-recording to determine the re-ordered point and optimum quantity order. However, further researches can be conducted on the influence of the main raw material quality due to an increase in order quantity. Moreover, further research can also be conducted on marketing strategies of CV. Fiva Food products which are expected to increase sales and profit
REFERENCES [AGRINA] Agribisnis Indonesia. 2014. Peluang Bisnis Manis Sosis. http://www.agrina-online. com/redesign2.php?rid=7&aid=4914.[29 Maret 2015]. [BPS] Badan Pusat Statistik. 2014. Laju Pertumbuhan PDB Triwulanan Atas Dasar Harga Konstan 2001-2014.http://www.bps.go.id/tab_sub/ view.php?kat=2 &tabel=1&daftar =1&id_ subyek=11¬ab=23. [1 September 2014]. Bititci US, Turner T. 2000. Dynamics of performance measurement systems. International
_______________________ WORLD TECHNOLOGIES _______________________
204
Journal of Operations and Production Management 20(6): 692–704. http://dx.doi. org/10.1108/01443570010321676. Cagnazzo L, Taticchi P, Brun A. 2010. The role of performance measurement systems to support quality improvement initiatives at supply chain level. International Journal of Productivity and Performance Management 59(2):163–185. http://dx.doi.org/10.1108/17410401011014249 Chan F, Qi HJ. 2003. An innovative performance measurement method for supply chain management. Supply Chain Management: An International Journal 8(3):209–223.http:// dx.doi.org/10.1108/13598540310484618. Chopra S, Meindl P. 2007. Supply Chain Management: Strategy, Planning, and Operation (3rd ed.). New Jersey: Pearson Education International. Fleisch E, Tellkamp C. 2005. Inventory inaccuracy and supply chain performance: A simulation study of a retail supply chain. International Journal of Production Economics 95(3):373–385.http:// dx.doi.org/10.1016/j.ijpe.2004.02.003. Gaspersz V. 1998. Production Planning and Inventory Control. Jakarta: Gramedia Pustaka Utama. Gomes CF, Yasin MM., Lisboa JV. 2004. A literature review of manufacturing performance measures and measurement in an organizational context: a framework and direction for future research. Journal of Manufacturing Technology Management 5(6):511–530.http://dx.doi. org/10.1108/17410380410547906. Henmaidi, Heryseptemberiza. 2007. Evaluasi dan penentuan kebijakan sediaan bahan baku kantong semen tipe pasted pada PT. Semen Padang. Jurnal Optimasi Sistem Industri 6(2): 75–86. Huan SH, Sheoran SK, Wang G. 2004. A review and analysis of Supply Chain Operations Reference Model. Supply Chain Management: An International Journal 19(1):23–29. http://dx.doi. org/10.1108/13598540410517557 Irfan D, Xiaofei X, Seng Chun D. 2008. A SCOR reference model of the supply chain management system in an enterprise. The International Arab Journal of Information Technology 5(3):287– 295. Khalid S. 2008. Trend forecasting for stability in supply chains. Journal of Business Research 61:1113–1124.http://dx.doi.org/10.1016/j. jbusres.2007.11.005. Lorentz H. 2008. Production locations for the internationalizing food industry: case study from
ENTREPRENEURSHIP MANAGEMENT
Russia. British Food Journal 110(3):310–334. http://dx.doi.org/10.1108/00070700810858718. Maisuriya AR, Bhathawala PH. 2013. A deterministic economic order quantity model with delays in payments and price discount offers. International Journal of Engineering Research and Applications 3(5):384–385. Mathew A. 2013. Demand forecasting for economic order quantity in inventory management. International Journal of Scientific and Research Publications 3(10):2250–3153. Melynk SA, Stewart DM, Siwank M. 2004. Metrics and performance measurement in operation management : Dealing with metric maze. Journal of Operation Management 22: 209–217.http:// dx.doi.org/10.1016/j.jom.2004.01.004 Permana HPP. 2011. Analisispengadaan bahan baku sebagai bagian dari internal supply chain management PT. Hadinata Brothers. [Tesis]. Sekolah Pascasarjana, Institut Pertanian Bogor. Bogor. Purnamasari H. 2011. Peningkatan efisiensi manajemen rantai pasok melalui pengendalian sediaan filler dan bahan kemasan roti manis di PT. Nippon Indosari Corporindo. [Tesis]. Program Studi Magister Manajemen Agribisnis, IPB. Bogor. Rajeev N. 2008. Inventory management in small and medium enterprises. Management Research News 31(9):659–669.http://dx.doi. org/10.1108/01409170810898554. Sidarto. 2008. Konsep pengukuran kinerja supply chain management pada sistem manufactur dengan model performance of activity dan supply chain operations reference. Jurnal Teknologi 1(1):6877. Tangen T. 2004. Performance measurement: from philosophy to practice. International Journal of Productivity and Performance Management 53(8):726–737.http://dx.doi.org/ 10.1108/17410400410569134. Waller MA, Nachtmann H, Hunter J. 2006. Measuring the impact of inaccurate inventory information on a retail outlet. International Journal of Logistics Management 17(3):355–376.http:// dx.doi.org/10.1108/09574090610717527. William JC, Germain RN, Birou L. 2007. Variance vs average: supply chain lead-time as a predictor of financial performance. Supply Chain Management: An International Journal 12(5):349–357. http://dx.doi.org/ 10.1108/13598540710776926.
_______________________ WORLD TECHNOLOGIES _______________________
22
FORESTRY COMPANY SATISFACTION TOWARDS Online INFORMATION SYSTEM IMPLEMENTATION OF FOREST PRODUCT MANAGEMENT (SI-PUHH) Mangatas Simanjuntak*)1, Arief Daryanto**), and Teddy Rusolono***) PT. Salaki Summa Sejahtera Kantor Taman A9 Unit B, Lt.3, Jl. Mega Kuningan Jakarta 12950 **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus IPB Dramaga, Bogor 16680 ***) Department of Forest Management, Faculty of Forestry, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga PO Box 168, Bogor 16680 *)
ABSTRACT This research was conducted with the aim 1) to analyze gaps that occurs between perception and expectations of the company implementation of SI-PUHH Online, 2) to analyze the level of satisfaction of the company implementation of SI-PUHH Online 3) Formulate a strategy to improve the quality of service implementation PUHH Information System Online. Analysis of the data used is the Importance Performance Analysis (IPA) and the Customer Satisfaction Index (CSI). The results showed that there are five attributes that considered important in determining customer satisfaction. These five attributes are: 1) System Online has a server that is up to date with internet bandwidth that is large so it is not easy down and can be accessed quickly; 2) response rapid administrator/operator; 3) accurate data in accordance with entrian company; 4) There is a backup server; and 5) Officer SI-Online PUHH always willing to help. The fifth attribute is an attribute that has a high level of importance, but in its implementation or performance is still unsatisfactory. Customer Satisfaction Index (CSI) on the implementation of this SIPUHH Online amounted to 72,07%, meaning that customers "satisfied" on the performance of services carried out by the Ministry of Environment and Forestry, but must maintain and improve the performance SERVQUAL PUHH Information System Online is to be able to satisfy the users company PUHH Information System Online. Keywords: SI-PUHH Online, SERVQUAL, IPA, CSI
ABSTRAK Penelitian ini dilakukan dengan tujuan 1) menganalisis kesenjangan yang terjadi antara persepsi dan harapan dari pelaksanaan perusahaan SI-PUHH Online, 2) menganalisis tingkat kepuasan dari pelaksanaan perusahaan SI-PUHH online; 3) Merumuskan strategi untuk meningkatkan kualitas pelaksanaan pelayanan Sistem Informasi PUHH online. Analisis data yang digunakan adalah analisis Importance Performance (IPA) dan Customer Satisfaction Index (CSI). Hasil penelitian menunjukkan bahwa ada lima atribut yang dianggap penting dalam menentukan kepuasan pelanggan. Kelima atribut adalah 1) server yang up to date dan tidak mudah down, 2) respon yang cepat dari administrator, 3) data akurat sesuai dengan entrian perusahaan, 4) ada backup server, 5) administrator selalu bersedia membantu. Atribut kelima adalah atribut yang memiliki tingkat kepentingan yang tinggi, namun dalam pelaksanaannya atau kinerja masih tidak memuaskan. Indeks Kepuasan Pelanggan (CSI) pada pelaksanaan SIPUHH online ini sebesar 72,07%, yang berarti bahwa pelanggan "puas" atas kinerja pelayanan yang dilakukan oleh Kementerian Lingkungan Hidup dan Kehutanan, tetapi harus mempertahankan dan meningkatkan kinerja SERVQUAL PUHH Sistem informasi online untuk dapat memuaskan pengguna perusahaan Sistem informasi PUHH online. Kata kunci: SI-PUHH Online, SERVQUAL, IPA, CSI
1
Corresponding author: Email: [email protected]
_______________________ WORLD TECHNOLOGIES _______________________
206
INTRODUCTION Forests in Indonesia are parts of the largest tropical forests in the world which should be properly managed due to their important role in improving the lives of the nation. One of the forestry products which has high economic value is wood. Its utilization process requires permit procedure, including Business Permit Timber Forest Product Utilization of Natural Forests (IUPHHKHA) in production forest. Forest-usage covers wide range of activities starting from forest planning, harvesting, forest skidding, measuring, wood testing, and transportation. The pressures coming from local and international environmentalists against the practices of forest management in Indonesia, including forest degradation and deforestation through illegal logging practices result in lower global competitiveness of wood raw material- based industries in Indonesia. Consequenlty, the government continues to make effort in improving forest-usage to be conducted by following the principles of Sustainable Forest Management (SFM), supported by online Information Systems Management of Forest (SIPUHH). Online SI-PUHH is PUHH data transaction technologybased media, and information media of PUHH with realtime implementation which can be accessed at the Central, Provincial, and District-levels and by the company in accordance with Regulation No. IUPHHK P8/Menhut-II/2009, Regulation No. P.45/ Menhut-II/2009 on amendments to the Regulation No. P.55/Menhut-II/2006, stating that PUHH derived from state forests will implement online SI-PUHH starting on September 1, 2009. By online SI-PUHH, the distribution of timber forest products becomes simple, smooth, orderly and safe with the principle of timber tracking/Chain of Custody (CoC), availability of statistical data production and distribution of forest products in real time, optimalization of state revenue; i.e. Reforestation Fund (DR) and Forest Resource Provision (PSDH), increased professionalism of bureaucracy, legal certainty and affirmation of punishment. Online SI-PUHH supports the government policy in the implementation of Timber Legality Verification System (SVLK) as a system to verify the legality of timber as industrial raw materials. SVLK is a response to some countries’ attitudes that join the European Union (EU) seeking for an assurance that the exported products to Europe are produced from legal wood raw materials with certification. Overdevest and Rickenbach (2006) argue that the certified wood from sustainably managed
ENTREPRENEURSHIP MANAGEMENT
forests is crucial in market competition; therefore, the government is expected to give incentives to the forestry companies that have been implementing the principles of sustainable forest management. Through the Forestry Regulation No. P41/MenhutII/2014 replacing Forestry Regulation No. P.55/MenhutII/2006, the Ministry of Forestry urges all companies of IUPHHK-HA to implement online SI-PUHH. Perdirjen BUK No. P.3/VI-BIKPHH/2014 dated June 10, 2014 Article 26 (2) states that IUPHHKHA holders must carry out online SI-PUHH no later than 1 (one) year from the enactment of the regulation. In late 2014, as many as 125 companies had implemented online SIPPUH. In the online SI-PUHH System, the Ministry of Environment and Forestry is the service provider holding roles as administrators and operators, while companies of IUPHHKHA are the users, and the Online SIPPUH implementation is mandatory to be implemented. As the service provider, the Ministry of Environment and Forestry, should constantly improve the quality of the system, particularly from the aspect of expectations and perceptions of the companies (users). This study aimed to analyze the Forestry Company Satisfaction towards Implementation of Online Information System Management of Forest Production (Online SI-PUHH). The research problems of this study were formulated as follows: 1) How is the gap/inbalance occuring between the perception and expectations of the IUPHHKHA companies to the implementation of Online SI-PUHH?; 2) How is the level of satisfaction of the company with the implementation of Online SI-PUHH?; and 3) How is it to improve the quality of Online SI-PUHH implementation service? Satisfaction level has a significant effect on loyalty, while it has no significant effect on recommendations. Loyalty has a positive relationship with customer recommendations, which means that loyalty has a significant effect on customer loyalty; thus increased loyalty of customers will contribute to an increase in customer recommendations (Ginting, 2014). Results of the research conducted by Zuwita (2012) show that the satisfaction value of the users of the investment permit services in PTSP BKPM is equal to 62,84%, and Rosidi (2010) states that satisfaction of the costumers of seeds of PT. SHS is reasonably good with a quite large CSI value that is 64%.
_______________________ WORLD TECHNOLOGIES _______________________
FORESTRY COMPANY SATISFACTION TOWARDS ONLINE INFORMATION SYSTEM...
Romayah (2015) examines the Assessment on e-Government Implementation in the Investment Coordinating Board (Thesis), Management and Business Study Program, Graduate School of Bogor Agricultural University. The study was conducted with a descriptive qualitative method. Based on the analysis of IPA, the quality of the system with low performance and priority of improvements for the BKPM include system reliability, access speed, download system, and system efficiency, while the low performance in the information quality includes attributes of KEKINIAN, punctuality and presented information.
METHOD The data used in this study were primary and secondary data. The first data were obtained directly from the first source i.e questionnaires from the companies of IUPHHK-HA as the Online PUHH Information System users until the end of 2014. Furthermore, the second data were obtained through literatures, data and documents obtained from the Ministry of Environment and Forestry Research on PUHH, the government policies regarding PUHH in Indonesia, Forestry Statistics Data and information from the internet. Questionnaires were made based on the attributes of service quality expectations and satisfaction of the company with the implementation of Online SI-PUHH. The distribution of questionnaires was conducted through the Association of Indonesian Forest Concessionaires (APHI). Census data collection was from by companies that have used Online PUHH Information System (125 companies) by the end of 2014 (http://puhh.dephut. go.id). The number of companies returning the data was as many as 63 companies (60 were complete and three were incomplete), while companies that did not return the questionnaire were inactive at the time of the research or rejected to become respondents. The dimensions and attributes that define the dimensions of the company's service quality satisfaction with the Online PUHH Online Information System were determined based on customer satisfaction researchbased information systems of Landrum et al. (2009), AlHudhaif (2010), Tryan and Ross (2006), Myerscough & Mark (2002) that is tangible, reliability, responsiveness, assurance, and empathy.
207
Validity Test of the questionnaire was conducted to test the validity of each attribute, while the reliability test was conducted to test whether the question items contained in the questionnaire as used as a means of collecting such data remained consistent to measure the same conditions of the respondents. The validty was calculated by using Microsoft Excel, while the reliability was calculated by using SPSS 21.0 software for Windows. Analysis of Imbalance/Gap was done by calculating SERVQUAL Score (IQ) developed by Zeithaml et al. (1990), which represents the difference between the value of the performance (P) and the value of the interest/expectation (E) of each attribute. Negative SQ indicates that there are indications of the quality gap in the quality attributes, whereas a positive indication of SERVQUAL Score shows sufficient quality to satisfy customers. IPA method introduced by Martilla and James (1977) was used to measure the relationship between the priority of improving the quality of products/services known as Quadrant Analysis and Consumer Perception. This method was used to obtain information about the IUPHHKHA Company’s satisfaction level on online SI-PUHH service by measuring the level of interest (expectations) and the level of execution (performance). The importance level of service quality indicates how important a variable service for customers is on service performance. The 5-level Likert scale used to measure the level of interest ranged from very important, important, quite important, less important and unimportant. IPA is a strategic tool that can quickly indicate the needs and desires as well as assess customer satisfaction (Wong et al. 2011). This method can be applied in evaluating and determining business strategies on a small scale (Levenburg et al. 2004), increasing educational technology services (Jairak et al. 2013), and sustaining forest management strategy (Kang et al. 2007). To gain the satisfaction level of consumers, the measurement of Customer Satisfaction Index can be conducted (Eboli and Mazzulla, 2009). Forest utilization is expected to provide benefits to all stakeholders, including the government, employers and the public with the principles of SFM supported by PUHH. The government improves PUHH services through the application of information technology to the implementation of online SIPPUH. Good perception of service quality is perceived from the users (user-based
_______________________ WORLD TECHNOLOGIES _______________________
208
ENTREPRENEURSHIP MANAGEMENT
approach) based on five SERVQUAL dimensions by Online SIPPUH users. Companies as online SIPPUH users provide an assessment of the level of interest (expectation) with the level of performance (perception) for the online PUHH Information System implementation. Company satisfaction measurement against online SIPPUH implementation was conducted by the methods of SERVQUAL Score and Importance Performance Analysis (IPA) based on expectations and satisfaction levels of companies towards the
implementation of online SI-PUHH. To determine the level of satisfaction, Customer Satisfaction Index (CSI) measurement was conducted. Based on the obtained data analysis, imbalance and gap between expectations and satisfaction can be identified, and CSI and strategies to improve the quality of service of the implementation of online SIPPUH can be also be obtained. Furthermore, priority of the improvement actions for online SIPPUH implementation services can be formulated. The research framework can be seen in Figure 1.
Forest Utilization Sustaining forest and state rights secured PUHH
1. Completion of PUHH Regulations 2. Service Improvement of PUHH to Company
IUPHHK-HA Company
Online SI-PUHl intributes affecting Company Satisfaction
Analysis on IUPHHK-HA company satisfaction on online SI-PUHH
User based approach Company expectation
Company satisfaction
Gap between expectation and satisfaction Customer Satisfaction Index (CSI)
Formulation of action priority for the Improvement of online SIPUHH implementation
Importance Performance Analisys (IPA)
Figure 1. Research framework
_______________________ WORLD TECHNOLOGIES _______________________
FORESTRY COMPANY SATISFACTION TOWARDS ONLINE INFORMATION SYSTEM...
RESULTS Validity and Measurement Reliability Based on the test validity of r-count value for the importance-level value that is 0,289–0,843, it can be stated that the measurement is valid because r-count is > table-r (0,289>0,0254). R-count value for satisfaction level is 0,370–0,876, which means that the measurement is considered as valid because r-count is > r-table (0,370 > 0,0254). The result of Alpha Cronbach value for consumer importance level is that α value equals 0,942, while that of the satisfaction level is 0,955. The data can be considered as reliable if α value is greater than 0,7 (Angelova and Zekiri, 2011). Based on the conditions, the measurement is determined to be reliable. Expectation and Satisfaction-level Assesment of Online SI-PUHH Service The average values of levels of importance, performance, and implementation gap of Online SIPUHH based on 23 attributes of SERVQUAL are presented in Table 1. Service quality is a comparison between expectations and services perceived by the customer, it is necessary to determine the level of expectations and user satisfaction (Jiang et al. 2012). The company hopes that the quality of services provided by the Ministry of Environment and Forestry can meet their needs in the implementation of PUHH, increase the trust of the company on online SI-PUHH and succeed in the program of the Ministry of Environment and Forestry in terms of management of forest products online, even though nothing it has nothing to do with loyalty because online SIPPUH is mandatory. The average scores of the company's expectation level on online SIPPUH range from 3,56 to 4,83, and the company argues that all SERVQUAL attributes have the scores of "important and very important" for the implementation of PUHH. It is important to meet the company's expectations for all of these attributes as the Ministry of Environment and Forestry serves a service provider. The smallest score is given to the attribute X3 that is the officers of online SI-PUHH should be neatly
209
dressed and wear badges while on duty, and the largest score goes to X8 attribute that is the Administrators of online SI-PUHH master any problems complained by the company i.e. certainty in handling time based on the agreement established. Problems often occur in online SI-PUHH are caused by maintenance system, internet network disruptions, lack of information as well as competence of the company operator. IUPHHKHA companies assess that the handling of complaints by a competent person and at the right time is the top priority of the company's expectations. In the event of operational constraints in the system, the company operator company will communicate with the officer of online SI-PUHH by phone or email but often does not get a quick response; as a result X8 attribute becomes the top priority of the company's expectations. To that end, the IUPHHKHA companies expect the call center of online SI-PUHH is available for 24 hours so that the constraints experienced can be resolved soon. The performance level indicates that the performance of online PUHH Information System is at the satisfaction level of 3,02 to 4,13 with an average of 3,6. The members of the company state that they are 'fairly satisfied' and 'satisfied' with the performance of the service of online PUHH Information System based on the 23 attributes of SERVQUAL The lowest satisfaction level of X11 attribute that is the officers online SI-PUHH always inform the service schedule that will be made to the company amounted to 3,02 of "reasonably satisfied". The company believes that the service schedule notification performed by the Ministry of Environment and Forestry and APHI has the lowest performance compared with the other attributes. Meanwhile, the highest performance score goes to X19 attribute of SERVQUAL i.e. the Ministry of Environment and Forestry gives the user id to the company to access online SI-PUHH with the average score of the performance level of 4,13 or "satisfied". These results indicate that administration of 'user id' to companies of IUPHHKHA by Ministry of Environment and Forests has met the expectations of the company and helps the company to control access to secure data.
_______________________ WORLD TECHNOLOGIES _______________________
210
ENTREPRENEURSHIP MANAGEMENT
Table 1. Results of calculation of the average level scores of satisfaction, expectation and gap of SERVQUAL from the service attributes Dimensions/ attributes
Description
Average level scores of satisfaction
Average level scores of expectation
Gap
Tangible X1
Website of online SI-PUHH online has an up to date server with large bandwith internet which will not be down easily and can be accessed quickly
3,29
4,62
-1,33
X2
Highly attractive design of online SI-PUHH Sites/website
3,80
3,90
-0,10
X3
The officers of online SI-PUHH are neatly dressed and wear an identity card while on duty
3,43
3,56
-0,13
X4
Website of online SI-PUHH are user-friendly, understandable, and easy to operate
3,80
4,70
-0,90
X5
Online SI-PUHH disseminates information on time and at any time when it is required
3,97
4,73
-0,76
X6
If there is a problem in the operation of online PUHH, the company can obtain quick responses from the administrator/operator
3,46
4,54
-1,08
X7
Website of online SI-PUHH online provides quick and accurate service in entering, downloading, and uploading data
3,53
4,78
-1,25
X8
The administrator of online SI-PUHH masters all problems complained by the company and guarantees that the problems will be handled as scheduled.
3,85
4,83
-0,98
X9
Online SI-PUHH enables the company to control the forest product management and data should not be a problem or damaged and has the slightest error
3,79
4,63
-0,84
X10
There is a backup server of online SI-PUHH in different locations to anticipate the malfunction of the main server at the Ministry Office
3,22
4,72
-1,50
X11
The officers of online SI-PUHH always notify the company regarding the incoming service schedule
3,02
4,23
-1,23
X12
The officers of online SI-PUHH provide quick service in accordance with the schedule given to the company
3,30
4,41
-1,10
X13
The officers of online SI-PUHH are always willing to help the company to operate online SI-PUHH
3,30
4,55
-1,25
X14
The officers of online SI-PUHH always provide adequate time in responding the request of the company
3,34
4,43
-1,09
X15
The officers of online SI-PUHH give confidence and improve the professionalism of the company employees.
3,53
4,18
-0,65
X16
Online-SI-PUHH website is not easy to be hacked by the irresponsible parties and provides up to date back up
3,93
4,73
-0,80
X17
The officers of online SI-PUHH are friendly and polite to the company during the consultation session
3,75
4,33
-0,58
X18
The officers of online SI-UPHH are knowledgeable in carrying out their duties
3,53
4,44
-0,91
The administrator of online SI-PUHH provides “user id” to the company to access the online SI-PUHH
4,13
4,80
-0,67
Reliability
Responsiveness
Assurance
Empathy X19 X20
Access to online SI-PUHH by the company must always be successful.
3,65
4,72
-1,07
X21
Online SI-PUHH has a 24 hour service support and it is easy to be contacted when a system error occurs
3,44
4,47
-1,03
X22
Use of online SI-PUHH gives benefits to the company
3,90
4,65
-0,75
X23
Ministry of Environment and Forestry holds trainings and provides regular system updates to the company
3,79
4,59
-0,80
_______________________ WORLD TECHNOLOGIES _______________________
FORESTRY COMPANY SATISFACTION TOWARDS ONLINE INFORMATION SYSTEM...
Gap Analysis Based on Tables 1, there is a gap between expectations and satisfaction obtained by IUPHHKHA in the implementation of online SI-PUHH where SERVQUAL attribute has the value gap between -0,10 and – 0,150. The negative sign (-) indicates perception (performance) obtained by the company is smaller than expected. This means that the performance of the Ministry of Environment and Forestry as a service provider online SI-PUHH does not meet the expectations of users of online SI-PUHH. The greatest gap score of SERVQUAL comes from X10 attribute i.e. there are backup servers of online SIPUHH in different locations to anticipate malfunction of the main server at the Ministry of Environment and Forestry. Improvement to this attribute is the top priority, since the administration of forest products is an activity that is carried out continuously by IUPHHKHA. Consequently, there must be a guarantee that the server remains active. If the main server is not well-functioning (due to maintenance purpose so that the internet does not work or others), it can be immediately replaced with the backup server. The backup server is the lowest in the expectations and perceptions of online SI-PUHH users, and it is the worst attribute of service quality or in other words, it is the most unsatisfactory item for the companies of IUPHHKHA. Since the PUHH activities are mandatory and regular as part of the production, the company expects that the server in the ministry can be accessed at any time by the company. The attribute with the second largest score gap is X1 attribute i.e. online SI- PUHH website has an up to date server with a large internet bandwidth that is not easily down and can be accessed quickly with a gap score of -1,33. X1 attribute is the second priority that must be addressed by the Ministry of Environment and Forests to ensure that online SI-PUHH has up to date hardware and software and easily accessed online SI-PUHH website, as long as it is connected by internet network and the server is not easily down/out of service when the company accesses it. Meanwhile, the attribute that has the smallest SERVQUAL gap score is X2 attribute i.e. attractive design of the online SI-PUHH website with a value of -0,10. This indicates that the service in terms of
211
design of online SI-PUHH Website display provided by the ministry to IUPHHKHA is the most satisfactory compared with other attributes. Thus, the Ministry of Environment and Forestry should improve its performance regarding all service attributes by taking into account the priority scales that start from the attributes that have the largest gap to the smallest gap in order to achieve SERVQUAL which can satisfy the IUPHHKHA companies. The gap analysis on the 5 dimensions of SERVQUAL dimensions shown in Table 2 shows that the service quality gap ranges from - 0,62 to - 1,28 with a negative sign (-) indicating that online SI-PUHH services have not been able to meet the expectations of the company users. Sequentially, the greatest gap to the smallest one starts from the dimensions of responsiveness, reliability, empathy, assurance to tangible which means handling or improvement in services needs to be prioritized in the dimension of responsiveness followed by reliability, empathy, tangible, and assurance dimensions. The gap on the responsiveness dimension is greatly influenced by the X10 attribute with a score of -1,50 and by X13 attribute with a score of -1,25. Therefore, to improve performance, especially on the responsiveness dimension, the priority is improving the performance of the existing backup servers of online SI-PUHH at different locations and the SI-PUHH attendants are always willing to help the company operate the online system. The gap is still greater than that of the research finding by James, OM et al. 2012, where each dimension of SERVQUAL i.e. tangible, reliability, responsiveness, assurance, and empathy has the score of -0,11, -0,18, -0,16, -0,18, and -0,23 respectively. Therefore, the Ministry should be able to improve its services in order to meet the expectations of the company. Table 2. Gap calculations of the five dimensions of SERVQUAL Indicators Tangible Reliability Responsiveness Assurance Empathy
Satisfaction 3,58 3,72 3,20 3,64 3,74
Expectation 4,20 4,70 4,48 4,42 4,61
Gap -0,62 -0,98 -1,28 -0,78 -0,87
_______________________ WORLD TECHNOLOGIES _______________________
212
Importance Performance Analysis (IPA) Strategy analysis to increase customer satisfaction by Importance Performance Analysis (IPA) is a way to map the attributes of importance and performance. This analysis is used to determine the position of online SIPUHH service quality attributes based on the level of expectation and satisfaction according to the companies of IUPHHKHA applying online SI-PPUH. The attribute position is described in Cartesian diagram in Figure 2. Quadrant A (high priority) consists of essential attributes whose performance are considered to be unsatisfactorily for IUPHHK-HA companies: - X1: online SIPUHH Website has an up to date server with a large internet bandwidth that is not easily down and can be accessed quickly. - X6: if there are problems in the operation of Online SIPUHH, the company will obtain a quick response from the administrator/operator of online SIPPUH. - X7: the processes of downloading and uploading data on online SI-PPUH are hardly problematic, and the data are accurate in accordance with the entries by the company. - X10: availability of Online SI-PPUH backup servers in different locations to anticipate malfunction of the main server at the Ministry. - X13: SI-PUHH officers of the Ministry of Environment and Forests are always willing to help the company operate its online SIPPUH. Quadrant B (sustainable achievement) consists of attributes that are considered to be very important and in practice they are considered to have a good performance by the companies of IUPHHK-HA namely: - X4: menu on online SI-PUHH format has been systematically arranged according to the needs of the company, easily understood, operated and equipped with manuals. - X5: online SI-PUHH produces timely information whenever it is needed. - X8: administrators of online SIPPUH can handle any problems experienced by the company well and handle them based on the established schedule. - X9: online SI-PUHH makes companies easier to control the activities of forest product management and data are never problematic or damaged and the possibility of error is very small.
ENTREPRENEURSHIP MANAGEMENT
- X16: online SI-PUHH is not easily damaged by irresponsible parties, and the administrators of online SI-PPUH provide up to date back up data. - X19: the Ministry of Environment and Forests provides user id/password to the company for online SI-PPUH access. - X20: every company wants successful access to online SI-PUHH. - X22: use of Online SI-PUHH is profitable for the company. - X23: the Ministry of Environment and Forests offers training to companies in applying the online SIPUHH and sends an easily understood letter to the company regarding SI-PUHH. Quadrant C (low priority) consists of attributes whose levels of importance are average as assessed by online SIPPUH users and their implementation is also considered to be average, namely: - X3: the officers of online SI-PUHH are dressed neatly and wear badges while on duty. - X11: the officers of online SIPUHH always inform the service schedule that will be made to the company - X12: the officers of SI-PUHH provide services quickly in accordance with a predetermined time to the company - X14: the officers of online SI-PUHH always provide sufficient time to respond to requests of the companies - X15: the officers of online SI-PUHH give confidence and improve the professionalism of the company - X18: the officers of online SI-PUHH have good knowledge in performing their duties. - X21: the officers of online SI-PUHH know the officers of the online SI-PUHH of the company. Quadrant D (excessive) consists of the attributes that are deemed to be less important by the users, but their performances are well executed by the ministry and satisfy IUPHHK-HA as the online SI-PUHH users: - X2: Attractive design of online SIPUHH websites - X17: The officers of SI-online PUHH behave friendly and politely to the company during the consultation
_______________________ WORLD TECHNOLOGIES _______________________
FORESTRY COMPANY SATISFACTION TOWARDS ONLINE INFORMATION SYSTEM...
213
Figure 2. Attribute position in expectation-satisfaction diagram Customer Satisfaction Index (CSI) Customer Satisfaction Index (CSI) of SERVQUAL of online SI-PUHH amounted to 72,07%. When compared with the Satisfaction Range Scale (Simamora, 2002), this value is in the interval value of 60–80%, which means that the company of IUPHHKHA is "satisfied" with the performance of online SI-PPUH. However, the performance description shows that there are gaps between the expectations and performances, especially if all IUPHHK-HA and other timber utilization permits will apply online SI-PPUH. Managerial Implications There are several things that require attention from the Ministry of Environment and Forests in the service improvement of online SI-PUHH. Building customer satisfaction should start from customer expectations and satisfaction which will occur if online SI-PUHH service provider provides quality services. IUPHHKHA companies are expecting that online SI-PUHH services can function 24 hours a day, indicating that it is expected not to be shut down. The followings are the requirements to support this service: - Providing up to date servers and infrastructure with sufficient bandwidth (internet connection) so that the company can easily and quickly access online SI-PUHH. Back-up servers ready to use are required
-
-
-
-
-
to ensure online SI-PUHH services continue to function if the main server is not functioning due to maintenance, faulty, error application or interrupted bandwidth. It is hoped that a back-up server is placed in a location that is different from the main server. Providing technical services such as call centers and a message service that can be accessed 24 hours a day and can respond to complaints promptly and appropriately. Providing help desk and stand-by officers during office hours at the ministry, for a consultation or complaint if a company experiences difficulties in running the online SI-PUHH. Providing training periodically to the company's technical personnel to update their understanding in the systems and laws that are applied in online SIPUHH. Providing solutions to the company if it cannot access online SI-PUHH caused by no connection between its server and that of the ministry or by malfunction of the online SI-PUHH server. Due to the rapid development of information technology systems that will affect technology in online SI-PUHH, clarification on a regular basis should be given to IUPHHK-HA regarding the minimum requirement device of online SI-PUHH that must be provided by the company and the technical personnel to run online SI-PUHH well.
_______________________ WORLD TECHNOLOGIES _______________________
214
CONCLUSIONS AND RECOMMENDATIONS Conclusions Based on the levels of importance and service performance of online SI-PPUH, all service attributes have negative SERVQUAL gap from 0,10 to 1,50. The greatest service attribute gap is X10 attribut that is online SIPPUH backup servers at different locations affect the backups which is included in the reliability dimension. Based on the analysis of Satisfaction-Expectation results, there are 5 attributes that should gain primary attention including reliable and up to date servers, quick responses from administrators, accurate data in accordance with the entries made by the companies, backup server, the administrators who are always willing to help. There were 9 attributes that should be maintained including the systematic-arranged menu, on-time information, problem mastering by the administrators, practical management of forest product by the company, not easily damaged, user id/ password provision, manageable access, profitable for the company, and training sessions. There are 7 attributes which are considered to be average based on their importance levels assessed by the users including neatly dressed officers, service schedule information, and prompt service, time provision to respond to requests of the company, increase the professionalism of the company, good knowledge, and know the Online SIPUHH officers of the company. There 2 attributes deemed to be less important, and their attention is excessive i.e. interesting display websites and friendly and polite officers. The level of customer satisfaction reflected by the amount of the Customer Satisfaction Index (CSI), and the IUPHHKHA companies generally affirm their satisfaction with the online SI-PPUH SERVQUAL with CSI of 72,07%. Recommendations In regards to to the limitations on the scope of this study, the following assessments which need to be expanded involving all parties include the online SIPUHH Wasganis (users) in the regions of the Province, Regency and BP2HP level. Therefore, the satisfaction
ENTREPRENEURSHIP MANAGEMENT
of the companies of IUPHHKHA with the Onlie SIPUHH implementation can be assessed to be more comprehensive.
REFERENCES Al-Hudhaif SA. 2010. Measuring quality of Information System Services in manufacturing organizations in Riyadh. JKAU: Econ. & Adm 24(1): 151–171. http://dx.doi.org/10.4197/eco.24-1.4 Angelova B, Zekiri J. 2011. Measuring customer satisfaction with service quality using American Customer Satisfaction Model (ACSI Model). International Journal of Academic Research in Business and Social Sciences 1(3): 232–258. http://dx.doi.org/10.6007/ijarbss.v1i2.35 Eboli L, Mazzulla. 2009. A new Customer Satisfaction Index for evaluating transit service quality. Journal of Public Transportation 12(3): 21–39. http://dx.doi.org/10.5038/2375-0901.12.3.2 Ginting SP. 2014. Analisis kepuasan dan loyalitas pelanggan internet prabayar berbasi CDMA (Studi Konfirmasi Internet Service Provider CDMA di Tiga Mall di Bogor) [Tesis]. Bogor: Program Studi Magister Manajemen dan Bisnis, Sekolah Pasca Sarjana, Institut Pertanian Bogor. Jairak K, Prasong P. 2013. Applying IT Balanced Scorecard and Importance Performance Analysis for providing IT governance strategy in university. Information Management & Computer Strategy 21:228–249.http://dx.doi.org/10.1108/imcs-082012-0036 James OM, Emmanuel OD, Robert A. 2012. Assessing farmers' satisfaction of agronomc services received in Ghana using the SERVQUAL Model, a Case Study of Kumasi Metropolis, International Journal of Business and Social Science 3:51–60. Jiang JJ, Klein G, Parolia N, Li Y. 2012. An analysis of three SERVQUAL variations in measuring Information System Service quality. The Electronic Journal Information Systems Evaluation 15: 149–162. Kang HM. et al. 2007. Importance-Performance Analysis of Forest Works for sustainable forest management in Korea. J.Fac. Agr., Kyushu University 41(1): 255–263.
_______________________ WORLD TECHNOLOGIES _______________________
FORESTRY COMPANY SATISFACTION TOWARDS ONLINE INFORMATION SYSTEM...
Landrum H, Prybutok V, Zhang X, Peak D. 2009. Measuring IS System Service Quality with SERVQUAL: Users' perceptions of relative importance of the five SERVPERF dimentions. Informing Science: The International Journal of an Emerging Transdiscipline 12. Levenburg NM, Magal SR. 2004. Applying Importance Performance Analysis to evaluate E-Business strategies among small firms. E-Service Journal 3:29–48. http://dx.doi.org/10.2979/ ESJ.2004.3.3.29 Martilla JA, Jamaes JC. 1977. Importance-Performance Analysis. Journal of Marketing 41: 13–17.http:// dx.doi.org/10.2307/1250495 Myerscough, Mark A. 2002. Information systems quality assesments: Replicating Kettinger an Lee's USISF/Servqual Combination. Eighth Americas Conference of Information System. Romayah S. 2014. Evaluasi implementasi e-Government di Badan Koordinasi Penanaman Modal [Tesis]. Bogor: Program Studi Magister Manajemen dan Bisnis Sekolah Pasca Sarjana Institut Pertanian Bogor. Rosidi. 2010. Analisis kepuasan konsumen terhadap kualitas pelayanan perusahaan (Studi Kasus di PT. Sang Hyang Seri Kantor Regional I Sukamandi) [Tesis]. Bogor: Program Studi Magister Manajemen dan Bisnis Sekolah Pasca Sarjana Institut Pertanian Bogor. Simamora B. 2002. Paduan Riset Perilaku Konsumen. Jakarta:PT. Garamedia.
215
Tryan CK, Ross SC. 2006. Service quality expectations and perceptions: Use of the Servqual instrument for requirements analysis. Issues in Information Systems 7(1): 357–362. Overdevest C, Rickenbach MG. 2006. Forest certification and institutional governance: an empirical study of the Forest Stewardship Council certificate holders In The United States, Forest Polucy an Economics 9: 93–102.http:// dx.doi.org/10.1016/j.forpol.2005.03.014 Parasunaman A, Zeithaml VA, Berry LL. 1985. A conceptual model of Service Quality and its implications future research. Journal of Marketing 49 (Fall):44. Wong MS, Hideki, George P. 2011. The Use of Importance-Performance Analysis (IPA) in evaluating Japan's e-government services. Journal of Theoretical and Applied Electronic Commerce Research 6: 17–30 Zeithmal VA, Parasunaman A, Berry LL. 1990. Deliver Quality Service: Balancing Customer Perception and Expectation. New York:The Free Prees. Zuwita ER. 2012. Analisis kepuasan pengguna jasa pelayanan perizinan penanaman modal di Pelayanan Terpadu Satu Pintu (PTSP), Badan Koordinasi Penanaman Modal (BKPM) [Tesis]. Bogor: Program Studi Magister Manajemen dan Bisnis Sekolah Pasca Sarjana Institut Pertanian Bogor.
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE JEMBER - EAST JAVA
23
Adetiya Prananda Putra*)1, Idqan Fahmi**), and Yossi Wibisono***) Study Program of Business Management of Tourism, State Polytechnic of Banyuwangi Jl. Raya Jember Km. 13 Labanasem, Kabat, Banyuwangi **) Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 ***) Study Program of Food Industry Technology, State Polytechnic of Jember Jl. Mastrip PO BOX 164 Jember 68101 *)
ABSTRACT The purpose of this study was to formulate a competitive strategy to maintain the existence of Prol Tape Primadona. The study used a case study approach with UD. Primadona as the research object. The data were analyzed by using a value chain approach to determine the internal and external conditions that influence Prol Tape Primadona and using analysis of IFE, EFE, CPM, IE, SWOT, and QSPM to develop competitive strategies for Prol Tape Primadona. The results show that the strategies that can be recommended to UD. Primadona are as follows: 1) increasing production capacity, 2) creating website/blog to promote Prol Tape, 3) adding the variants of Prol Tape, 4) stricting quality control to maintain strong brand equity, and 5) establishing coordination with the district government of Jember to make Prol Tape as a superior product. Keywords: competitive strategy, Prol Tape Primadona, UD. Primadona, QSPM, SWOT
ABSTRAK Penelitian ini bertujuan untuk merumuskan strategi bersaing sehingga dapat menjaga eksistensi Prol Tape Primadona. Penelitian menggunakan pendekatan studi kasus dengan UD. Primadona sebagai objek penelitiannya. Data dianalisis dengan pendekatan rantai nilai untuk mengetahui kondisi internal dan eksternal yang berpengaruh terhadap prol tape Primadona kemudian menggunakan analisis IFE, EFE, CPM, IE, SWOT, dan QSPM untuk menyusun strategi bersaing Prol Tape Primadona. Hasil penelitian menunjukkan bahwa strategi-straegi prioritas yang dapat direkomendasikan kepada UD. Primadona yaitu 1) peningkatan kapasitas produksi, 2) membuat situs web/blog untuk mempromosikan Prol Tape, 3) melakukan penambahan varian Prol Tape, 4) pengendalian mutu yang ketat untuk menjaga ekuitas merek yang kuat, dan 5) melakukan koordinasi dengan pemerintah kabupaten Jember untuk menjadikan Prol Tape sebagai salah satu produk unggulan. Kata kunci: strategi bersaing, Prol Tape Primadona, UD. Primadona, QSPM, SWOT
1
Corresponding author: Email: [email protected]
INTRODUCTION Cassava is a plant that has been well known to people all over Indonesia. Cassava production in East Java tends to increase every year, and the Central Statistics Bureau data show that cassava production in East Java in 2012 reached 4.246.028 tonness (BPS, 2012). The total cassava production in East Java was ranked the
second after Lampung Province with the amount of 8.387.351 tonness. This shows that cassava is one of the commodities that is still favored by the farmers of East Java. Based on this potential, it is necessary to have some alternatives in its utilization in order to support the food security program. To increase the added value, cassava can be processed into tape singkong through a fermentation process or using cassava yeast;
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE...
moreover, Tape singkong can also be processed into other products. Jember is one of the regencies in East Java with agriculture as the main source of livelihood. One of the agricultural products that meets all the sub-systems of agribusiness in Jember is cassava. Jember recorded the cassava production in 2012 reached 47.803 tonnes. Jember is a regency that is famous for its cassava-based dishes although it is accounted for only 1,1% of cassava production in East Java. Jember has several small industries with various industrial units in which they are engaged in the processed snack products, such as tape singkong (fermented cassava snacks). Tape singkong can be processed into prol tape, brownies tape, and suwarsuwir. The availability of raw materials, especially the abundant yellow cassavas, makes the development of processed cassava products grows more rapidly. This causes prol tape, brownies tape, and suwar-suwir to be the typical snacks of Jember, and they have the potential to be developed. Therefore, they can have strong image like typical snacks of other areas that have been wellknown throughout Indonesia. UD. Primadona is one of the manufacturers of processed cassava products in Jember with its excellent products of suwar-suwir, prol tape, and brownies tape. The company sales data in 2012 showed that sales of prol tape, suwar-suwir, and brownies tape were 63,42%, 28,76%, and 7,82% of the total units/boxes of these three products respectively. From this data, it appears that prol tape of UD. Primadona is the most popular product. It is the tape processed product that is almost the same as the cake tape, but the material used is tape singkong instead of wheat flour. Prol tape has many kinds of flavors, such as chocolate, cheese, raisin, and plain. UD. Primadona consistently strives to maintain the quality of products offered by applying the traditional methods in the manufacture of prol tape that is by using the firewood oven. The company is very strict in maintaining the quality of their products, so that it is forming a strong positioning in the eyes of consumers. Nevertheless, this is only temporary because the attacks given by its competitors currently are very intensive. The competitors are trying to get the product quality of Primadona’s prol tape by offering a more competitive price, and this gradually will attract potential customers
217
to switch to another brand. The sales data of the last three years show that sales of UD Primadona’s prol tape tend to be stagnant or not increasing i.e. 83.225 boxes in 2010, 82.373 boxes in 2011, and 84.352 boxes in 2012. From these data, it appears that the activity of competitors is able to gradually inhibit the development of UD. Primadona because there is no increase in sales despite the annual increasing number of visitors. Data from Disperindag and Dinas Koperasi and UKM Jember show that there are 15 business units in this industry in which 3 of them become the main competitors of UD. Primadona i.e. UD. Sumber Madu, UD. Pelangi Sari, and UD. Sari Madu. Bondowoso Regency, a neighbor to Jember, is also doing an intensive development of prol tape. It can be a threat to all manufacturers of prol tape in Jember in general and UD. Primadona in particular. In regards to the large number of manufacturers of prol tape that tend to be the followers of UD. Primadona, it is necessary to formulate a competitive strategy formulation for the sake of maintaining the existence of the company to win and satisfy its consumers. With the preparation of a competitive strategy, it will directly help the company to build a company blueprint that can be used as a reference basis for its development. The competitive strategy must involve the value chain approach to analyze the external and internal environment conditions of UD. Primadona’s prol tape. In addition, the formulation of competitive strategy also requires analysis of the company's position and competitive position of UD. Primadona’s prol tape and reviews strategies that have been implemented previously by the company. These analyses serveas inputs in the preparation of competitive strategy so the company can maintain its existence and continue to grow and develop. There are two studies that became a benchmark in this study. The first was Koentarto (2011) who examined the SWOT analysis in order to improve competitiveness on the CV. Antasari Kesuma Pangkalan Bun. This study used analysis tools of IFE, EFE, and SWOT to assess the increase in the competitiveness of small and medium enterprises (SMEs); however, CV. Antasari did not use the analysis of Critical Path Method (CPM) and Quantitative Strategic Planning Matrix (QSPM) as the researchers did on the study of competitive strategy at UD. Primadona. The addition of CPM analysis aimed to determine the competitive landscape in the
_______________________ WORLD TECHNOLOGIES _______________________
218
industry of prol tape, and QSPM analysis was used to determine the sequence of generated competitive strategies. The second was Tanjung (2011) who examined the competitive strategy on the value chain of broiler at PT. Ciomas Adisatwa Bogor by using SWOT approach. The results showed that in order to improve the competitiveness of PT. Ciomas Adisatwa Bogor, it is necessary to optimize the production, improve the quality of chicken, and conduct a public educational program on the benefits of eating chicken through promotional programs, to implement quality management in the enlargement process, to optimize the application of biosecurity, and to change the method of the cage into a closed house. Results from this study were used as material consideration constituent factors in the internal and external descriptive analyses of UD. Primadona’s prol tape. The objectives of this study were to analyze the internal and external factors affecting the prol tape of UD. Primadona Jember, to examine the position of UD. Primadona’s prol tape in the competitive landscape in Jember, and to determine the competitive strategy priorities that can be applied by UD. Primadona Jember for its prol tape.
METHODS This study sought to develop a competitive strategy based on the framework of the preparation of the strategy by David (2012). This research was classified as a descriptive, qualitative and quantitative research. The types and sources of data used were primary and secondary data. Primary data are the data obtained directly from the source, while secondary data are the data obtained through interviews and other interested parties associated in this study. The respondents of this study were the owner of UD. Primadona, Head of Department of Industry and Trade Jember, Deputy Director 1 State Polytechnic of Jember, and the people with specific criteria. Selection of respondents was carried out with the consideration that they were the parties who were directly involved in UD. Primadona in particular, and prol tape industry in Jember in general, and they consisted of the practitioners, local government, academia, and general public. The location of the research was in UD. Primadona Jember, East Java. The choice of location was determined intentionally (purposive sampling), with the
ENTREPRENEURSHIP MANAGEMENT
consideration that UD. Primadona is a market leader in prol tape business. In this study, prol tape industries were mapped through the analysis of the factors that affect the sustainability of the company to obtain descriptive information of Primadona’s prol tape. Descriptive analysis was conducted by collecting answers based on a list of questions (questionnaire) that had been made (Saputra, 2009). Descriptive analysis was used as a basis to analyze the external and internal factors which were presented in matrix IFE and EFE. Results of the analysis were used for IE analysis to determine the company's position in the prol tape industry. In addition, CPM matrix analysis was also conducted to determine the condition of the competitors based on analysis of the critical factors that were obtained through the interviews with the owner of UD. Primadona. SWOT Analysis used the power to overcome weaknesses and to take advantage of every opportunity while removing all threats so that the company obtains various strategic alternatives of UD. Primadona (Chan, 2011). SWOT analysis can also provide insights for the competence of the organization after evaluating the data so they can be used to formulate an altertenatif strategy (Ayub et al. 2013). Results of SWOT analysis provide some alternative strategies pursued by the logic to achieve the goal (Ikhsan, 2011). This set of strategies was chosen as some relevant strategies in accordance with the results of the analysis of IE and CPM. The relevant strategies were then used as the basis for QSPM analysis. Results of this analysis in the form of competitive strategy priorities would be handed to UD. Primadona for consideration. The framework of this study can be seen in Figure 1.
RESULTS Internal Factors Analysis The internal factors were calculated using a paired comparation to determine the weight and scale of priority interest immediately addressed to determine the rating. The results of IFE matrix analysis (Table 1) shows the main strength Primadona factor lies in the use of its traditional roasting method with a score of 0,352. This suggests that the traditional roasting method can produce a distinctive aroma which is unique for prol tape, and this indicates that this strength is a key factor of success that should be maximized. Utilization
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE...
of the key success factors must be supported by other factors so as to maximize all potential power owned by Primadona’s prol tape to compete with the competitors' products. The main weakness factor of UD. Primadona was its small production capacity with a score of 0,066. Its small production capacity has not been a major focus of improvement by the company because its rating on this factor was 1. Kitchen capacity limitation in a became a major cause of this weakness factor since the enlargement of the kitchen was hard to do due to the limited space. Purchasing a property/a new building around the old building can be an effective solution to address these problems. The main focus of UD. Primadona is to suppress the weakness in its higher price if compared with the competitors’ price. Therefore, we need to expand the effort to create an efficient production process or apply the principle of economies of scale and increase the number of production to reduce the average cost of production. Lower price with the same quality product can attract more customers and increase the number of consumer purchases. The analysis also generates total weighted score of 2,405, and this suggests that the ability of internal factors UD. Primadona in the competition of prol tape is below the average. This result shows that the weaknesses of UD. Primadona are more dominant than the strengths; therefore, it is necessary to have strategies to suppress these weaknesses. The price
219
issue of more expensive products than those of the competitors and small production capacity factor must soon meet their solution. Therefore, Primadona’s prol tape can maintain its presence under the pressures of its competitors’ poducts. External Factors Analysis Analysis of external factors were calculated by using a paired comparation to determine the weight and scale of response priorities of UD. Primadona to determine the rating. The results of IFE matrix analysis (Table 2) show that the main opportunity factor is the increasing number of visitors of tourists and students with a weight value of 0,135. Although this factor becomes a major opportunity, the highest response for UD. Primadona is in the abundance of raw materials because they can meet the demand of prol tape; in addition, the internal factor of production capacity must also be improved. The results of the analysis also show that there are two factors of opportunities that have not been responded well i.e. ease of access to financial services for business development and implementation activities in Visiting Jember Month/Bulan Berkunjung ke Jember (BBJ) as a promotional event. The company, with the power of capital on its own, is a composite of the entire family; therefore, it tends not to require assistance from outsiders. In addition, it has not maximized its promotional activities during BBJ event. This Jember Expo held by the Jember Regency during BBJ is considered to be less attractive in which UD. Primadona is reluctant to participate in such activity.
UD. Primadona’s Prol Tape
Internal Environment (Strength and Weaknes) of Prol Tape
The Position of the company
External Environment (Opportunity and Threat) of Prol Tape
Competitive Positioning of Prol Tape
Alternative strategy
Relevant strategy
Priority Strategy
Figure 1. The framework
_______________________ WORLD TECHNOLOGIES _______________________
220
ENTREPRENEURSHIP MANAGEMENT
Table 1. Results of internal factor assessment Strength The application of cutting-edge technology except the oven The use of traditional roasting method A strategic outlet location Capital strength or strong asset ownership Strong brand equity Unique product packaging Total Weakness Less intensive promotional activities Rare implementation of research and product development Outlet space constraints Small production capacity Higher price of products compared to the price of its competitors Unavailable web site/blog company Total Total Weighted Score
Weight 0,083 0,088 0,089 0,097 0,073 0,076 0,506
Rating 4 4 3 3 4 4
Score 0,333 0,352 0,267 0,292 0,292 0,306 1,842
0,089 0,093 0,088 0,066 0,068 0,090 1,000
1 1 1 1 2 1
0,089 0,093 0,088 0,066 0,137 0,090 0,563 2.405
Weight 0,135 0,128 0,125 0,125 0,117 0,630
Rating 3 2 4 3 2
Score 0,406 0,255 0,500 0,375 0,234 1,771
0,120 0,120 0,130 1,000
4 1 2
0,479 0,120 0,260 0,859 2,630
Table 2. Results of external factor assessment Opportunity Increasing number of visitors of tourists and students. Easy access to financial services for business development. Abundant raw materials. Strong customer loyalty. Implementation of the Jember Visiting Month (BBJ) as a promotional event. Total Threat High intensity of Competitors Issue on the patent of prol tape as unique food by other regencies Emergence of food substitutes (pia tape, processed edamame) Total Total Weighted Score
The main threat factor of UD. Primadona is the emergence of substitutes (pia tape and processed edamame) with a weight of 0,130. However, this factor does not become a threat factor which well responded by UD. Primadona but high intensity of competition becomes the threat factor with a score of 0,479. The emergence of substitutes (pia tape and processed edamame) is weakly responded y by the company because this factor is considered not to overly affect the sales of prol tape. Consumers will indeed be interested in the emergence of new products; nevertheless, this does not affect the purchase of prol tape because the new product has its own uniqueness, so the consumers tend to keep buying prol tape in addition to the new product. High competition intensity factor is feared to
interfere with the existence of Primadona’s prol tape because the competitors have been trying to duplicate Primadona’s prol tape by offering lower price; as a result, the company is worried that consumers would shift to competitors' products. The analysis also shows that the issue of the prol tape specialties by other regencys is hot, but this is considered not to give a great influence on Jember’s prol tape. This is due to an image in the community that prol tape is a processed cassava food originated from Jember. The analysis also generated a total weighted score of 2,630, indicating that the responses of UD. Primadona to external factors in the competition of prol tape were above the average. This result shows that the company
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE...
has been able to maximize opportunities and avoid threats. This phenomenon is expected to continue so as to increase the competitiveness of Primadona’s prol tape. Competitive Position Analysis Analysis of the competitive position was performed using paired comparation method to determine the weight and scale of priorities of excellence to determine the rating. CPM analysis result indicates that the Primadona’s prol tape scores higher than other prol tape brands in total i.e. 3,063. The result indicates that the Primadona’s prol tape is superior to the competitor products; however, the advantage is small because the difference in the total value is very small. Primadona’s prol tape has a typically delicious aroma because the company uses a traditional roasting method, and unique packaging offered is also the main attraction of this prol tape. The transparent part of packaging makes the consumer can immediately see the contents of prol tape, so that consumers will not feel cheated. The flavor factor does not have significant differences from other brands, and this can be seen from the rating value which is often similar. The price offered by Primadona’s prol tape tend to be higher than those of the competitors' products. This is the main problem for the competitive position of Primadona’s prol tape, therefore, a strategy to overcome this problem is required. Although currently the loyal consumers still purchase Primadona’s prol tape, in the long-term it is feared consumers will switch to the competitive products. The CPM analysis results are presented in Table 3.
221
Company Position Analysis The results of the analysis using IFE and EFE show that each score obtained IFE = 2,405 and EFE = 2,630. These scores were then included in Internal External analysis (IE). The assessment result in Figure 2 placed competitiveness of Primadona prol tape in quadrant V (hold and mantain) as shown in Figure 2. The strategy that can be carried out by implementing market penetration and product development. Formulation of Strategy Options The formulation of a competing alternative strategy for Primadona’s prol tape was obtained by using SWOT analysis. According to David (2012), alternative strategy is divided into four, i.e. S-O strategy (strength-opportunities), W-O strategy (weaknessesopportunities), S-T strategy (strength- threats), W-T strategies (weaknesses-threats). From the preparation of the strategy on SWOT matrix, it generated 13 alternatives in accordance with the internal and external factors in increasing the competitiveness of Primadona’s prol tape as can be seen in Figure 3. SWOT analysis resulted in 13 competitive strategies for UD. Primadona’s prol tape. Thus, they are formulated into five alternative strategies that best fit based on the analysis of the position of prol tape and the company's competitive position by carrying out an assessment of each alternative strategy to acquire strategic priorities. Determination of priority strategies was acquired through QSPM analysis. The QSPM analysis results are presented in Table 4.
Table 3. Results of competitive position analysis Important Success Factor Flavor Aroma Packing Price Total
Weight 0,241 0,246 0,281 0,232 1
Primadona Rating Score 3 0,723 4 0,982 4 1,125 1 0,232 3,063
Prol brand Tape Pelangi Sari Sumber Madu Rating Score Rating Score 3 0,723 2 0,482 3 0,737 3 0,737 3 0,844 3 0,844 3 0,696 3 0,696 3,000 2,759
Sari Madu Rating Score 3 0,723 3 0,737 3 0,844 3 0,696 3,000
_______________________ WORLD TECHNOLOGIES _______________________
222
ENTREPRENEURSHIP MANAGEMENT
Strong 3,0 - 4,0 High 3,0- 4,0 EFE total weighted value
Moderate 2,0 - 2,99 Low 1,0 - 1,99
IFE Total Value weighted Average 2,0 - 2,99
Weak 1,0 - 1,99
I
II
III
IV
V
VI
VII
VII
IX
Figure 2. Result of company position assessment
STRENGHTS 1. Application of cutting-edge technology except for the oven. 2. Utilization of traditional roasting methods. 3. Convenient location of the outlets. 4. Ownership of assets, or strong capital 5. Strong brand equity. 6. Unique product packaging.
1. 2. 3. 4. 5.
OPPORTUNITIES Increasing number of visitors of tourists and students. Easy access to financial services for business development. Abundant raw materials. Strong customer loyalty. Implementation of the Jember Visiting Month (BBJ) as a promotional event.
THREATS 1. High intensity of competition. 2. Issue on the patent of prol tape as unique food by other regencies 3. The emergence of food substitutes (pia tape, processed edamame).
1. 2. 3. 4.
1. 2. 3.
WEAKNESSES 1. Less intensive promotional activities. 2. Rare implementation of research and product development 3. Limited location of the outlets. 4. Small production capacity. 5. Higher price than those of the competitor products. 6. Unavailability of website/ blog of the company S-O STRATEGY W-O STRATEGY Increased production capacity. (S1, 1. Vertically extensive development S2, S3, S4, S6 Vs O1, O2) of outlets. (W3 Vs O1, O2) Backward integration (cooperation 2. Efficiency of the production with suppliers of raw materials). process to reduce the production (S4, S5 Vs O3) cost. (W2, W5 Vs O1, O3) Intensive promotional activities 3. Increased production capacity. (W4 during the implementation of the Vs O3) BBJ. (S5 Vs O5) 4. Creation of a website/ blog to Capital strengthening. (S4 Vs O2) promote prol tape. (W1, W6 Vs O4, O5) S-T STRATEGY W-T STRATEGY Strict quality control to maintain 1. Intensive promotional activities. strong brand equity. (S1, S2, S3, S5 (W1, W6 Vs T1, T2, T3) Vs T1, T2) 2. Coordination with the local government of Jember regency to make Addition of variants of prol tape. (S1 Vs T3) prol tape as one of its superior Creation of a more unique product products. (W3 vs. T2) packaging. (S4, S6 vs. T1, T3)
Figure 3. Results of competitive strategy evaluation
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE...
223
Table 4. Results of matrix QSPM analysis Priority 1 2 3 4 5
Alternative strategies Increased production capacity Creation of a website/blog to promote prol tape Addition of variants of prol tape Strict quality control to maintain strong brand equity Coordinate with the local government of Jember Regency to make prol tape as one of its superior products
Optional strategies sorted by priority are as follows: 1. Increased production capacity High consumer demand is not accompanied by an increase in production capacity. The traditional roasting method (firewood) often only produces small amount of product volume; therefore, it can be said that UD. Primadona is not able to fulfill the demand of prol tape. However, the roasting method has become the hallmark of Primadona’s prol tape, therefore, it cannot be replaced with a modern toasting method because this method will produce a distinctive aroma. To overcome this, the company should perform additional roasting equipment capacity. Increasing the number of production can increase the supply of prol tape, so that high consumer demand can be met. Selection of this strategy as a relevant strategy for further analysis was based on the results of competitive position analysis and company position analysis. Competition analysis results indicate that Primadona’s prol tape is less competitive in regards to the price aspect. Increased production capacity will enable the company to achieve economies of scale, so that the sale price is lower. Results of the analysis of the company's position state that UD. Primadona should conduct market penetration strategies and product development. Increased production capacity can support market penetration strategies in an attempt to answer high demand of prol tape. 2. Creation of a website/blog to promote prol tape Online promotion is very necessary in this era of globalization. Most people have relied heavily on the Internet to search for information. A large number of ads are posted online on the internet to attract consumers. UD. Primadona should create a website/ blog to introduce its products. Every product made in Primadona including prol tape can be described in detailed in the web/blog, including the addresses of the existing outlets in Jember. Ease access of information is expected to attract more consumers to come to
Value TAS 6,617 6,484 6,269 6,194 6,097
UD. Primadona outlets. This strategy supports the resulting market penetration strategies in the analysis of the company's position as the optimization of online promotional activities in which it can increase the product information accessed by the consumers, and it eventually can attract the interest of consumers. 3. Addition of variants of prol tape To maintain consumers’ interest towards Primadona’s prol tape, it is necessary to add some new variants. They likely continue to try new flavor variants, so they will not feel bored with the same taste. Consequently, it is necessary to do prol tape development activities, especially the addition of extra material variants that can avoid the boredom of consumers towards the existing products of prol tape. This strategy supports product development strategy. To prevent consumers boredom against food products, it is necessary to add new variants that keep the consumer's interest to prol tape. Currently, there are four flavors of prol tape i.e. plain, cheese, cheese walnuts, and raisin cheese. 4. Strict quality control to maintain strong brand equity Primadona brand image has created a strong product positioning in the minds of consumers. UD. Primadona is a pioneer in prol tape snack that has been publicly known for a long time as the pioneer in the creation of product snack specialties in Jember and has earned a special place in the hearts of the consumers. The company should apply strict product quality control to maintain customer loyalty. The quality assurance should perform well on the quality of raw materials, precision of SOP in the manufacturing process and prol tape packaging and storage. Monitoring activities are carried out throughout the production process from the beginning to the end, so that high product quality is always guaranteed. Market penetration strategy must be accompanied by a guarantee of the quality of products offered. Strict quality control can ensure that even if
_______________________ WORLD TECHNOLOGIES _______________________
224
the total amount of product has been increased, the quality remains good, so that it can make Primadona brand equity remains strong. 5. Coordinate with the local government of Jember Regency to make prol tape as one of the featured products UD. Primadona, together with other companies, should coordinate with the local government of Jember regency to create a policy that positions prol tape as a superior product of Jember. This can help the industrial development in Jember because this sector can be a priority in the preparation of the local government policy in strengthening capital sector and in promotional assistance, so that it can conduct market penetration strategy. Moreover, this strategy can directly create an image that prol tape is the typical product of Jember and the ultimate choice of typical snacks, and it indirectly will improve the competitiveness of Primadona’s prol tape.
CONCLUSIONS AND RECOMMENDATIONS Conclusion The conclusion of this study is that the chain of Primadona’s prol tape consists of production and marketing processes. The production process in the kitchen is conducted at Primadona outlets. All of the raw materials to make prol tape are obtained from the market, while the packaging is specifically ordered from the printing agency. The strategic factor that becomes the main force and has the highest relative importance is the use of traditional baking method. The main weakness of the strategic factors that has the highest relative importance is the small production capacity. The strategic opportunity factor that has the highest relative importance is abundant supply of raw materials, and the strategic factor which poses a threat with the highest relative interest is the high intensity of competition. Primadona’s prol tape position is in quadrant V ( hold and maintain ), with a sense of medium internal and external positions so that a picture of strategy that can be done is an intensive form of market penetration and product development strategies. Primadona’s prol
ENTREPRENEURSHIP MANAGEMENT
tape with their packaging and aroma is considered to be superior to competitors’ products. Flavor factor has no significant difference, and the price offered by Primadona’s prol tape tends to be higher than that of the competitors' products. Optional strategies are sorted by priorities or order of importance strategies that must be implemented. The first priority is to increase the production capacity; the second is to create websites/blogs to promote prol tape; the third is to produce additional variants of prol tape; the fourth is to have strict quality assurance to maintain its strong brand equity, and the fifth priority is to coordinate with the local government of Jember Regency to make prol tape as one of its superior products. Recommendations A number of points that can be delivered as suggestions and recommendations for UD. Primadona and further research are as follows: 1) in improving the competitiveness of prol tape UD. Primadona needs to do a strategy based on the priorities obtained from the results of this study in order to maintain the existence of UD. Primadona’s prol tape industry in Jember; 2) the company needs to innovate in terms of production and marketing to maintain the existence of Primadona’s prol tape to grow and to develop continously, especially in the case of the use of additional ingredients that are low in calories that can be consumed by all circles; 3) the company should immediately add recycling capacity through the construction of a kitchen or purchase of property (buildings) around the outlet because the limited available capacity has not been able to meet the high consumer demand; 4) the company should immediately create a blog with wordpress or blogspot, so that online marketing can be carried out immediately.
REFERENCES Ayub A, Adeel R, Muhammad SA, Hanan I. 2013. A conceptual framework on evaluating SWOT analysis as the mediator in strategic marketing planning through marketing intelligence. European Journal of Business and Social Sciences 2(1): 91–98.
_______________________ WORLD TECHNOLOGIES _______________________
COMPETITIVE STRATEGY OF A MARKET LEADER; CASE OF UD. PRIMADONA’S PROL TAPE...
BPS [Badan Pusat Statistik]. 2012. Luas panen, produktivitas dan produksi ubi kayu Jawa Timur tahun 2012. http://jatim.bps.go.id/4dm!n/brs_ ind/brsInd-20150306023832.pdf [10 Mei 2015]. Chan X. 2011. A SWOT study of the development strategy of Haier Group as one of the most successful Chinese enterprises. International Journal of Business and Social Science 2(11): 147–153. David FR. 2012. Manajemen Strategis: Konsep. Jakarta: Salemba Empat. Ikhsan S, Artahnan A. 2011. Analisis SWOT untuk merumuskan strategi pengembangan komoditas karet di Kabupaten Pulang Pisau, Kalimantan Tengah. Jurnal Agribisnis Pedesaaan 1(3): 166– 177.
225
Koentarto I. 2011. SWOT analisis sebagai upaya meningkatkan daya saing pada CV Antasari Kesuma Pangkalan Bun. Jurnal ilmu sosial (3)1: 81–86. Saputra H et al. 2009. Strategi pengembangan ternak sapi potong berwawasan agribisnis di Provinsi Aceh. Jurnal Manajemen & Agribisnis 6(2): 152–162. Tanjung MH. 2011. Analisis strategi bersaing pada rantai nilai ayam ras pedaging PT. Ciomas Adisatwa Region Jawa Barat Unit Bogor [tesis]. Bogor: Institut Pertanian Bogor.
_______________________ WORLD TECHNOLOGIES _______________________
24
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU Tantry Nugroho*)1, Ujang Sumarwan**), and Kirbrandoko***)
School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 **) Department of Family and Consumer Science, Faculty of Human Ecology, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 ***) Ibn Khaldun Bogor University Jl. Kh. Soleh Iskandar KM. 2, Kedung Badak, Tanah Sereal, Bogor 16162 *)
ABSTRACT This study aimed to analyze the factors that influence consumers in making the decision to buy organic tofu. The theory of factors that influence the purchasing behavior developed by Kotler was used as the analytical tool, and these factors include cultural factors, social factors, personal factors, psychological factors and purchasing process. These data were collected through interview techniques and analyzed descriptively using multinomial logistic regression. The characteristics of respondents indicated the consumers who never bought organic tofu are mostly at the age of 26–35 years old and university graduates, do not work, have an expenditure from Rp 1 million to Rp 2,5 million, are highly knowledge, and have the highest scores on the perceptions on sustainable and environmentally friendly organic farming, health benefits, and a more expensive price. There are a number of factors that influence consumers in making purchase decisions of organic tofu including age, education, knowledge and product external factors. The consumers who are potentially interested in purchasing the organic tofu are at the age of 36–50 years old, university graduates, highly knowledgeable in food and organic tofu products, because the higher the education and knowledge, the greater the interest in buying the products, and they approved of the external products such as price, advertising, personal selling and places of selling which are also potentially equal. The managerial implications for the business agents of tofu organic product is that they must be more active in assuring the consumers that these products are good for them by creating a blog, an ad in the local paper, or a pamphlet containing information of the product. Keywords: purchase decision, logistic regression, organic tofu product, purchasing interest
ABSTRAK Penelitian ini bertujuan menganalisis faktor yang mempengaruhi konsumen dalam melakukan pengambilan keputusan membeli tahu organik. Sebagai alat analisis digunakan teori faktor-faktor yang mempengaruhi perilaku pembelian yaitu teori yang dikembangkan oleh Kotler dimana faktorfaktor tersebut adalah: faktor budaya, faktor sosial, faktor pribadi, faktor psikologis dan proses pembelian. Data ini dikumpulkan melalui teknik wawancara serta dianalisis secara deskriptif dan uji regresi logistik multinomial. Karakteristik responden menunjukkan konsumen yang sudah pernah membeli sebagian besar berada pada usia 26–35 tahun, berpendidikan perguruan tinggi, tidak bekerja, berpengeluaran 1–2,5 juta, memiliki pengetahuan tinggi, memiliki persepsi setuju dengan skor tertinggi mengenai pertanian organik berkelanjutan, ramah lingkungan, manfaat kesehatan dan harga yang lebih mahal. Terdapat faktor-faktor yang mempengaruhi konsumen dalam pengambilan keputusan pembelian tahu organik diantaranya usia, pendidikan, pengetahuan dan faktor eksternal produk. Konsumen yang berpotensial dan berminat membeli tahu organik terdapat pada usia 36–50 tahun, pendidikan tamatan perguruan tinggi, pengetahuan yang tinggi mengenai pangan serta produk tahu organik, karena semakin tinggi pendidikan dan pengetahuan maka akan semakin besar minat membeli, serta konsumen yang setuju mengenai eksternal produk seperti harga, iklan, personal selling dan tempat penjualan juga berpotensi sama. Implikasi manajerial bagi pelaku bisnis produk tahu organik adalah lebih giat dalam meyakinkan produk tersebut terbukti baik bagi konsumen, seperti membuat blog atau membuat iklan di koran lokal, atau pamflet yang berisikan info dari produk. Kata kunci: keputusan pembelian, regresi logistik, produk tahu organik, minat membeli 1
Corresponding author: Email: [email protected]
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
INTRODUCTION Of the five major food commodities, soybeans are the main focus because of their reasonably high protein content and inexpensive price, making them suitable for a source of nutrition. According to Ginting et al. (2009), soy protein content ranges between 35% and 45% of dry soybeans. Soybean demand increases every year in line with the growth of population, increased public awareness of the nutritional adequacy, and development of industries that use raw materials of soybeans. The projection data of national soybean consumption can be seen in Table 1. Besides, soybeans are one of the agricultural commodities whose role is quite important for the national economy, especially as a provider of employment and source of income. This is evidenced by the value total of tofu industrial production which is the highest among other derived soybean products, and if seen from the number of business units of tofu which reaches half of the total business units of soybean cake (tempe), it has been proved that tofu industries can develop and have a reasonably high market opportunity, and this is an opportunity for new business agents in this industry, but they should have higher values of the products and maintain their quality so that the products remain to be the choice of the consumers. Data on the number of companies, labor and production values of soy-based products can be seen in Table 2.
227
The issue of the importance of organic food and lifestyle oriented toward organic food has already been widely spread in major cities. Demand in organic food in Indonesia increased rapidly in 2009, reaching 425 tons of organic products and increased by 50% from the previous year which was supported by the government program of "Go Organic" in 2010. Widianarko (2014) in a national seminar and a meeting of the Association of Scientific Experts food Technology Indonesia (PATPI) said the increase in the national organic food market is at 5% per year with a sales value of approximately Rp10 billion. Although it is relatively small, there is a positive response from the public to choose a healthier life. This increase is due to the increased awareness of the public on the dangers arising from the modern or conventional agriculture in the long term i.e. the emergence of various diseases caused by the accumulation of chemical residues. Therefore, most communities have begun to change their direction to consume food not only for the fulfillment of basic needs but also for other considerations such as the level of food security (food safety attributes), nutrient content (nutritional attributes), product processing (manufacturing process attributes), and environmentally friendly products (eco-labeling attributes). The food products are organic products free from harmful chemicals such as additive substances, fertilizers and chemical pesticides, so they become high quality products containing vitamins, fibers, minerals and other substances that are useful for human body.
Tabel 1. Projection of National Soy Consumption 2015–2019 Keterangan
2012 2013 2014 Konsumsi total (Juta Ton) 2,52 2,57 2,67 Sumber: Directorate of Food and Agriculture, Bappenas (2013)
Tahun 2015 2016 2,77 2,88
2017 2,99
2018 3,12
2019 3,25
Table 2. Number of companies, labor and production values of soy-based products in 2011 Types of industry Companies (business unit) Labor (person) Soybean cake 56,762 151,279 Tofu 28,609 99,462 Soybean sauce 1,506 8,596 Tauco 2,086 5,107 Other processed products 3,430 8,529 Total 92,393 272,973 Source: Dir. Gen. of Small-Medium Scaled Industries – Ministry of Industry (2011)
Production value (Million Rp) 695,716 831,645 101,894 38,851 72,886 1,740,992
_______________________ WORLD TECHNOLOGIES _______________________
228
One of the examples of organic foods that is familiar to our ears is organic rice, but lately organic tofu as one of the soy derivative products has become familiar to the consumers as well. In addition to the threat of diseases due to accumulation of residues of chemicals, it was reported that there have been many products using preservatives, undergoing less hygienic processing and having poor packaging, and this triggered the idea of running businesses in producing tofu organic which is expected to reduce all concerns of the consumers in avoiding products unfit for consumption. A number of research on tofu product have been conducted including the decision-making process of the tofu product by Djadi Sari (Manurung, 2012) and Arliana (2002) who conducted a tofu marketing analysis of the company of Yun Yi Bogor. However, the issue on tofu organic is relatively new, and there has been no research result obtained. The factory managers of tofu organic have faced obstacles in the process of operation and marketing. Marketers have also experienced problems due to lack of information on consumer behavior toward tofu organic. Higher prices of organic food compared to plain tofu and limited market segments have made the organic tofu product to be less familiar to the general public. The price difference between organic tofu and plain tofu in the market today ranges from Rp 1,000 to Rp 2,500. In order to develop the industry of organic tofu which is relatively new, the factors that influence the purchase decision of tofu organic such as the characteristics of the consumers, consumer knowledge on the basic food organic or tofu organic product, consumer perceptions, environment, internal and external factors of products that affect the interest in buying organic tofu must be understood first. Therefore, it is necessary to study the factors that influence consumer purchase decisions towards organic tofu. Research on purchase decisions and interests of consumers on organic products had previously been conducted by Paul and Rana (2012) and Lee and Yun (2015). The objective of this study was to analyze the factors that influence purchase decisions by consumers of organic tofu.
METHODS Selection of the research site in this research was done intentionally (purposive sampling) i.e. in Bogor based on the following considerations: Bogor is one of the manufacturing and marketing areas of tofu organic
ENTREPRENEURSHIP MANAGEMENT
where the number of consumers is reasonably high in West Java, as well as the availability of the required data and study objects of organic tofu companies. This final assignment was carried out for two months, i.e. from January 2015 to February 2015. The research object was the household consumers, and the population of this study included the housewives who purchased plain or organic tofu products in Bogor. The sampling was carried out by non-probability sampling method using Convenience Sampling technique. The primary data were obtained through interviews and questionnaire, and the respondents were those who were willing to spend their time to fill in the questionnaire. The sampling collection was conducted deliberately, and as many as 110 respondents were chosen and divided into two groups i.e. 77 respondents who purchased plain tofu and 33 respondents who ever bought organic tofu. According to Santoso (2004), the number of respondents recommended for the application of factor analysis is between 50 to 100 respondents while Stolz (2011) who applied the multinomial logistic regression analysis used 100 respondents. The dependent variable in this study was the organic tofu purchase decision while the independent variables used consisted of age, education, employment, expenditure, knowledge of organic food and organic tofu product knowledge, environment, internal and external products. Age was categorized into four groups, namely, (16–25 years), (26–35 years), (36–50 years), (>50 years). Education was categorized into three groups, namely, elementary and junior high schools (low), high school and its equivalent level (medium), diplomas, graduates and postgraduates (high). Occupations were categorized into two groups i.e. non-employees and employees, and expenditures were categorized into four groups i.e. (<1 million rupiahs), (1–2,5 million rupiahs), (2,5–5 million rupiahs), (> 5 million rupiahs). The knowledge variable index was divided into two which were measured by questions that generated the nominal data with a choice of yes and no answers. The level of knowledge of organic foods consisted of eight questions, while the level of knowledge of organic tofu products consisted of 15 questions. One correct answer was weighted 100, and one incorrect was given zero point.
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
A question that should be answered with the amount known by the respondents were given a score of 100 if the answer is more than two and less than 50 for the answer less or same with two. After that, the samples were classified into four categories i.e. very low (0–25), low (26–50), high (51–75), very high (76–100). The variables of environment and internal and external products were measured by several questions using the Likert scale of strongly disagree (score 1), disagree (score 2), neutral (score 3), agree (score 4), strongly agree (score 5). For the environmental factor and internal product, there were seven questions, and the maximum value was 35, the minimum value was 7, and with the class number of 2, then the class interval was (35–7) / 2 = 14. Therefore, the score range of 7–21 equals to disagree, and the score range of 22–35 equals to agree. Moreover, the external product factor consisted of four questions where the maximum value was 20 and the minimum value was 4, and with the class number of 2, the class interval was (20–4)/2 = 8. The score range of 4–12 equals to disagree and that of 13–20 equals to agree. The regression model with the response variable with the nominal scale of three categories used the Y result variables coded by 0, 1, and 2. The parameterized Y variable became two logit functions. However, the response categories used as a previous comparison category by Hosmer and Lemeshow (2000) had to be determined first. According to Nachrowi (2008), the regression model in the form of opportunity function with an independent variable is expressed in the following equation: ln[p/(1-p)]= y1= β10+β11Usia + β12 Pendidikan + β13Pe kerjaan+β14Pengeluaran+β15Pengetahuan +β16F.Lingkungan+β17F.Int.Produk+β18F. Eks.Produk ln[p/(1-p)]=y2=β20+β21Usia+β22Pendidikan+β23Pekerja an+β24 Pengeluaran+β25 Pengetahuan+β26 F.Lingkungan +β27F.Int.Produk+β28 F.Eks. Produk ln[p/(1-p)]=y0=β00+β01Usia+β02Pendidikan+β03Pekerja an+β04Pengeluaran+β05Pengetahuan+β06 F.Lingkungan+β07F.Int.Produk+β08 F.Eks. Produk ßjp estimation will be obtained by the iterative process because the resulted equation is not linear. Logit function and its meaning can be explained as follows:
Y1 Respondent 1 Respondent 0 Respondent 0
229
Y2 0 1 0
Respondents were grouped into three, namely: Y1 = 1 if the respondents have never purchased but are not interested in buying organic tofu, Y2 = 0. Y2= 1 if the respondents have never purchased but are interested in buying organic tofu, Y1 = 0. If Y1 = 0 and Y2 = 0, then these respondents have ever purchased organic tofu Y1 = 0 and Y2 = 0 were used as a comparison. The logistic regression was tested along with the variables related to age, education, occupation, expenditures, knowledge, and environment, internal and external products as well. The analysis used SPSS, and all independent and dependent variables (dummy and index numbers) used in this analysis were tested together to obtain independent variables with their significance less than 10%. The testing of parameters performed in this study included the independent test of chi square, goodness of fit test, and Wald test.
RESULTS
The Characteristics of the Respondents There were 110 housewives involved in this study and divided into three groups, namely, 33 people who never bought organic tofu, 24 people who never bought the product but were not interested in it, 53 people who never bought but were interested in buying the product. The age of the respondents was grouped into four categories i.e. 36–50 years old (50%), 26–35 years (37,27%), 16–25 years old (3,63%), and > 50 years (9,1%). The majority of respondents completed their education from Diploma to Graduate levels (49,09%), followed by high school graduates (43,64%), elementary/junior high graduates (5,45%), and graduates of postgraduate level (1,82%). The majority of respondents did not work (60,9%), and work (39,1%) with their spending levels of 2,5-5 million rupiahs (44,5%), followed by 1–2,5 million rupiahs (40,9%), 1 million rupiahs (7,3%), and > 5 million rupiahs (7,3%). The complete data can be found in Table 3. The area of sampling collection in this study was divided into two, namely, the city and district of Bogor, and the data were mostly obtained from the city of Bogor i.e. 80,90%.
_______________________ WORLD TECHNOLOGIES _______________________
230
The consumer behaviors in this research included the tofu purchase, tofu consumption, reasons or motivation for tofu purchase, as well as benefits of tofu consumption. The frequencies of tofu purchase and tofu consumption reached 2 to 3 times a week equal to 47,27% and 43,64% respectively. The majority of the respondents were motivated to buy tofu since it is a cheap protein source (50,91%), and most of them understood the benefits of buying tofu as a replacement of animal protein (72,73%). The general perception of the consumers of organic tofu can be seen from the questions such as ‘what they know about the organic tofu, how important it is to consume the product, and what motivation they have in consuming the product. Based on their perceptions, organic tofu is free from pesticides and chemicals (68,18%), and they also considered the importance of consuming organic tofu (66,36%). Moreover, some of them mentioned that organic tofu is healthier and highly nutritional (52,73%). In regards to the consumer behavior, the reason for those who never bought or heard about organic tofu was that they never heard the product before (70,83%). The consumer behavior can be seen from the information on the existence of the product where the majority of the respondents stated that they obtained the information from the electronic or printed media (36,36%).
ENTREPRENEURSHIP MANAGEMENT
respondents who never bought but were also interested in buying organic tofu are at the age of 36–50 years (54,72%). This is because a number of consumers at this age group have knowledge on food and organic tofu products, and it is evident that they have a high level value of knowledge. The respondents who have ever bought were at the age of 26–35 years (45,45%). This result is due to the fact that the consumers at this age of group have knowledge about food and organic tofu product, and it is evident that the majority of consumers have a high level value of knowledge and are university graduates. The education category of the respondents has the largest percentage of 62,50% where those who never bought organic tofu but were not interested in buying it are high school graduates. The respondents who never bought but were interested in buying organic tofu are university graduates with the percentage of 54,71%, and 60,60 % of the respondents who ever bought graduated from university. These results are consistent with Ozguven (2012) where demographically the respondents who buy organic products are highly educated. The results have proved that the higher the education of the consumers, the higher the decision to purchase and consume as this is caused by a high level knowledge of the consumers on food and organic tofu product.
The majority of the respondents made unplanned decisions to purchase organic tofu (75,76%), and most of them ate organic tofu 2 to 3 times a week (33,33%). The organic tofu was mostly purchased in the stalls/shop vendors (42,42%). Mayoritas konsumen berdasarkan peralihan konsumsi tahu biasa ke organic tofu yaitu kombinasi antara organic tofu dan tahu biasa (72,73%). The majority of consumers based on regular tofu consumption shifted to organic tofu with a combination of organic tofu and plain (72,73%). Moreover, the majority of the consumers were satisfied with the product (90,91%).
In regards to the occupation category, the highest percentage of 87,50 % came from the unemployed respondents who never bought and were not interested in buying organic tofu. The percentage of the unemployed respondents who never bought but were interested in buying organic tofu was 54,72%. Moreover, the percentage of the unemployed respondents who ever bought organic tofu was 51,51%. The results have proved that the occupation of the consumers did not affect the purchase decisions of organic tofu; however, it can be concluded that consumers who do not work have the tendency neither to buy nor to be interested in buying the product.
In Table 3, the respondents who never bought tofu organic but were not interested in buying the product are at the age of 36–50 years with the largest percentage of 62,50%. This is because the consumers are not familiar with organic tofu and unaware of the benefits and uses of organic tofu as it can be seen from the table that the majority of the consumers in this age group have little knowledge in food and organic tofu products. The
In regards to the expenditure category, the percentage of the respondents who neither bought nor were interested in buying organic tofu was 45,83% (Rp 2,5–5 millions) where the percentage of the respondents never bought but were interested in spending their money to buy organic tofu was 49,6% (Rp 2,5–5 millions). Also, the percentage of the respondents who ever bought was amounted to 48,48% (Rp 1–2,5 million). The results
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
do not prove that greater the consumers expenditure, the greater the chance of purchasing organic tofu. The consumers who never bought organic tofu but were not interested in buying the product tend to have higher expenditure than those who ever bought the product. The results indicate that the level of knowledge of the respondents who never bought and were not interested in buying the product was low, while the respondents who never bought but were interested in buying as well as those who ever bought the product have a high level of knowledge. The results of the environmental variables of the three types of respondents showed that they have quite similar perceptions where two perceptions have the highest percentage i.e. the sustainable and environmentally friendly organic farming. This shows that the average of the respondents agreed with the perception that buying organic tofu products will help save the environment as well as support the sustainable organic farming. In
231
addition, the consumers already understand that the conventional agriculture can indirectly damage the environment in the long run. According to Chen (2007) and Becker et al. (2015), the environmentally friendly motive can determine the positive attitude of consumers to choose organic food, and according to Shafie & Rennie (2012) shared environmental concerns can influence consumers’ preferences in organic foods.The results of internal product variables have concluded that consumers who ever bought organic tofu obtained the highest score in the question related to the health benefit factor, which means that the consumers rates the organic tofu products as one way to live a healthy life. This is in accordance with Weng et al. (2014), Paul & Rana (2012), Deliana (2012), Chen (2009) and Thogersen et al. (2015) who have shown that consumers have a positive value toward the organic food and are more willing to buy food organic where health is a major benefit perceived.
Table 3. Characteristics of consumers based on the respondent groups Respondent groups They have never Have never bought purchased organic tofu organic tofu but are Have ever purchased but are not interested interested in buying organic tofu in buying the product the product Frequency (%) Frequency (%) Frequency (%)
Total respondent Frequency
(%)
Age (year) 16–25 26–35 36–50 >50 Total Education ES dan JHS SHC/Its equivalence Diploma s/d Postgraduate Total Occupation Employees Non-employees Total Expenditure <(1.000.000) (1–2,5 millions) (2,5–5 millions) >(5.000.000) Total
0 9 15 0 24
0,00 37,50 62,50 0,00 100
3 17 29 4 53
5,66 32,07 54,72 7,55 100
0 15 12 6 33
0,00 45,45 36,37 18,18 100
4 41 55 10 110
3,63 37,70 50,00 9,10 100
2 15 7 24
8,33 62,50 29,17 100
1 23 29 53
1,89 43,40 54,71 100
3 10 20 33
9,10 30,30 60,60 100
6 48 56 110
5,45 43,64 50,91 100
3 21 24
12,50 87,50 100
24 29 53
45,28 54,72 100
16 17 33
48,49 51,51 100
43 67 110
39,10 60,90 100
4
8
16,67 33,33
3 21
5,66 39,62
1 16
3,03 48,48
8 45
7,30 40,90
11 1 24
45,83 4,17 100
26 3 53
49,06 5,66 100
12 4 33
36,37 12,12 100
49 8 110
44,05 7,30 100
_______________________ WORLD TECHNOLOGIES _______________________
232
In contrast, the consumers who never bought organic tofu obtained the highest score on safety factor. They assessed that organic tofu product is the solution for replacing products that use chemicals or preservatives, and this is in accordance with the research conducted by Bauer et al. (2013) and Aygen (2012) that indicate that the reason for the consumers to buy organic products is product safety. Based on the information from the consumers, organic tofu products can reduce the doubts of these products which are known to contain preservatives or use chemicals; moreover, this product becomes an alternative for food options for consumers who want to live healthy. The results of product external variables showed a striking difference that is the price factor. The consumers who ever purchased organic tofu were aware of organic products which are usually more expensive, but they are worth buying because of the quality obtained. In contrast, for the consumers who never bought and were not interested in the product, the price factor has the lowest percentage, or they disagreed with the higher price of the product. This is because they did not know types of organic tofu products, and even only a few of them heard about the organic tofu products, so that they did not know the differences in prices between plain and organic tofu products. According Saleki et al. (2012), prices have an influence on the attitude of the consumers in buying organic foods. Besides, there is a striking difference in the personal selling factor in which the respondents never bought the products and were either interested or not interested in buying the products, and they had a greater percentage in comparison with that of the respondents who had ever bought. Therefore, it is proved that the consumers have the perception of agreement to buy the products when the sellers give advice or offer the products. The reason is the same as that of the price factor i.e. a large number of consumers do not know the types of organic tofu products; therefore, explanation on the products must be given. Multinomial Logistic Regression Analysis: Factors Affecting the Purchase Decision of Organic Tofu The explanatory variables can be said to have a close relationship with the response variables or in any other sense it is significantly influential if the p-value is <0,10. The basic use is α = 0:10 because the study used the social variables, and also because the data in the
ENTREPRENEURSHIP MANAGEMENT
field can sometimes be difficult to control as pointed out by Kusumasari (2012) and Irvani (2012). The explanatory variables that are significantly influential on the multinomial response variables such as age, education, knowledge of organic food and product external factors. The results of the model estimation involving eight explanatory variables generated a G-value of 150.064 and a p-value of 0,001 <0:10; therefore, it can be concluded that there is one or more explanatory variables that influence the purchase decision of organic tofu. Interpretation Coefficient: Factors Affecting the Purchase Decision of Organic tofu The results of logistic regression estimation result model of the study, the coefficient interpretation results of the logistic regression analysis prove that of the eight independent variables, there are four significant variables including age, education, knowledge and product external factor, while the insignificant variables include employment, expenditures, and environment and product internal factor. The variables that are influential or not influential will be explained on Table 4. Age and education had a P-value smaller than α=0,10 which is significant in the purchase decision of organic tofu. The first logistic multinomial (logit 1) has the interpretation that consumers of the age 26–36 years have 4, 532 times greater opportunity not to buy organic tofu and uninterested in buying the product if compared with those aged > 50 years. This indicates that the older the consumers, the greater the tendency of buying organic tofu. As they become older, they have more knowledge of the importance of organic foods, product safety and health awareness, and this encourages them to buy organic products. Meanwhile, the second model of logistic multinomial (logit 2) has the interpretation that consumers aged 36–50 years have 7,434 times greater chance to have never buy organic tofu but are more interested if compared with those aged> 50 years. This means that consumers at the age of 36–50 years are more interested in buying organic tofu as supported by the research of Jui Shih-Tung et al. (2012) who state that female consumers in their 40s are more likely to buy and eat organic food. Schobesberger (2008) states that the respondents who buy organic tofu tend to be older than those who do not buy the product.
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
233
Table 4. Results of the logistic regression model estimation on the factors that influence consumers in making a purchase decision of organic tofu B
Std. Error
Wald
df
Sig.
Intercept
-24.429
1.639
222.194
1
.000
[AGE=.00]
22.782
.000
.
1
.
Decision They have never purchased organic tofu but are not interested in buying the product
7.838
[AGE=1.00]
19.932
.793
631.829
1
.000
4.532
[AGE=2.00]
20.769
.000
.
1
.
1.047
0b
.
.
0
.
.
[EDUCATION=.00]
[AGE=3.00]
-1.797
1.465
1.504
1
.220
.166 4.970
[EDUCATION=1.00]
1.603
.894
3.215
1
.073
[EDUCATION=2.00]
0b
.
.
0
.
.
[OCCUPATION=.00]
1.750
.918
3.635
1
.057
5.756
[OCCUPATION=1.00]
0b
.
.
0
.
. 9.096
[EXPENDITURE=.00]
2.208
2.000
1.218
1
.270
[EXPENDITURE=1.00]
.209
1.406
.022
1
.882
1.232
[EXPENDITURE=2.00]
1.144
1.384
.684
1
.408
3.139
[EXPENDITURE=3.00]
0b
.
.
0
.
.
[PGRH.T.PGTHN=.00]
4.614
2.038
5.125
1
.024
100.900
[PGRH.T.PGTHN=.1.00]
3.127
1.346
5.392
1
.020
22.796
[PGRH T.PGTHN=2.00]
.762
1.319
.334
1
.563
2.143
[PGRH.T.PGTHN=3.00] [INFLUENCE OF ENVIRONMENTAL ATTITUDE=.00] [INFLUENCE OF ENVIRONMENTAL ATTITUDE=1.00] [INFLUENCE OF INTERNAL FACTOR PERCEPTION=.00]
0b
.
.
0
.
.
.415
.833
.248
1
.619
1.514
0b
.
.
0
.
.
-.488
1.669
.085
1
.770
.614
[INFLUENCE OF INTERNAL FACTOR PERCEPTION=1.00]
0b
.
.
0
.
.
[INFLUENCE OF EXTERNAL FACTOR PERCEPTION=.00]
-.771
.850
.823
1
.364
.462 .
[INFLUENCE OF EXTERNAL FACTOR PERCEPTION=1.00] Have never bought organic tofu but are interested in buying the product
Exp(B)
0b
.
.
0
.
Intercept
-2.576
1.303
3.912
1
.048
[AGE=.00]
21.410
6858.54
.000
1
.998
[AGE=1.00]
.773
.862
.803
1
.370
1.988 2.165
[AGE=2.00]
2.006
.895
5.023
1
.025
7.434
[AGE=3.00]
0b
.
.
0
.
.
[EDUCATION=.00]
-2.265
1.526
2.202
1
.138
.104
[EDUCATION=1.00]
.731
.680
1.155
1
.282
2.076
[EDUCATION=2.00]
0b
.
.
0
.
.
[OCCUPATION=.00]
.312
.550
.321
1
.571
1.366
[OCCUPATION=1.00]
0b
.
.
0
.
.
[EXPENDITURE=.00]
2.211
1.788
1.529
1
.216
9.123
[EXPENDITURE=1.00]
.895
.947
.893
1
.345
2.448
[EXPENDITURE=2.00]
1.457
.943
2.388
1
.122
4.292
[EXPENDITURE=3.00]
0b
.
.
0
.
.
[PENG.T.PGTHN =.00]
1.986
1.616
1.510
1
.219
7.289
[PENG.T.PGTHN =1.00]
1.290
.840
2.362
1
.124
3.634
[PENG.T.PGTHN =2.00]
.536
.706
.576
1
.448
1.710
[PENG.T.PGTHN =3.00]
0b
.
.
0
.
.
[INFLUENCE OF ENVIRONMENTAL ATTITUDE=.00]
-.107
.642
.028
1
.867
.898
[INFLUENCE OF ENVIRONMENTAL ATTITUDE=1.00]
0b
.
.
0
.
. 1.824
[INFLUENCE OF INTERNAL FACTOR PERCEPTION=.00]
.601
1.272
.223
1
.636
[INFLUENCE OF INTERNAL FACTOR PERCEPTION=1.00]
0b
.
.
0
.
.
[INFLUENCE OF EXTERNAL FACTOR PERCEPTION=.00]
-1.437
.687
4.376
1
.036
.238
[INFLUENCE OF EXTERNAL FACTOR PERCEPTION=1.00]
0b
.
.
0
.
.
_______________________ WORLD TECHNOLOGIES _______________________
234
The first model of education variable (logit 1) has the interpretation that consumers with a completed high school education/its equivalence have 4,970 times greater chance to have never purchase and are not interested if compared with those who graduated from diploma or postgraduate level. It can be said the higher the education of the consumers, the higher their tendency to buy organic tofu. This is possible because the educated consumers have more knowledge on the importance of organic food and farming where Rezai et al. (2011) in their research see that in the demographic and attitudinal variables on the interest to buy green products, the level of consumer education is also significantly positive. Briz and Ward (2009) also state that education is the main factor influencing consumer awareness of organic products. Knowledge and product external factors have a P-value less than α = 0,10. This means that they significantly influence the purchase decisions of organic tofu. The knowledge variable of the first model (logit 1) has the interpretation that consumers with a very low level of knowledge have 100,900 times greater chance not to buy organic tofu and have no interest of buying the product if compared to the consumers who have a very high level of knowledge. In addition, the consumers with a low level of knowledge have 22,796 times greater chance of never buying organic tofu and having no interest of buying the product if compared to those with a very high level of knowledge. The statement is in accordance with Hamid et al. (2012) who state that the ecological knowledge of low level of community does not have a significant relationship with attitudes of consumers towards the purchase of environmentally friendly products. It can also be said the higher level of knowledge of the consumers, the higher their interest in buying organic tofu. For the product external factors, the second model (logit 2) has a consumer interpretation with the perception of disagreement that purchase decisions are influenced by product external factors in which the chance that the consumers do not buy organic tofu is 0,238 times less if compared to those who have a perception of agreement. It can be concluded that the consumers who agreed to external factors products had a greater opportunity in buying organic tofu or ever bought the products than those who disagreed. There are a number of perceptions obtained from the consumers including relatively more expensive price, selling areas easily accessible and found, attractive advertising and brochures, and sales
ENTREPRENEURSHIP MANAGEMENT
method such as giving special offers for the products so that these can encourage the consumers to make purchases of organic tofu products. In accordance with the previous studies, the factors that effectively influence consumers to buy organic food according to Cene and Karaman (2015) and Hjelmar (2011) include the availability of products and product prices. Saleki et al. (2012) state that the price factor is also a factor, and Pomsanam et al. (2014) also mention the factor of the availability of products, while Noviandi (2012) argues that prices and advertisements influence the consumers’ purchase decisions. Occupation and expenditure have a P-value greater than α=0,10. This means that they did not significantly influence the purchase decisions of organic tofu. The occupation of the housewife consumers i.e. whether they work or do not work did not affect the decision to purchase organic tofu products. This is possible because the respondents consisted of a number of housewives, most of whom do not work, but they still can afford to buy the organic tofu product. As a housewife, they are entitled to get an amount of money from their husband and have an authority over purchase decisions for foods in the house. This is evidenced from the total respondents that 60,90% of respondents do not work and the average number of the respondents who had ever bought organic tofu do not work either. In addition, the results indicate that different amount of expenditure or income of the consumers i.e. < Rp1 million to > Rp5 million does not influence them in choosing and buying organic tofu products. Usually, the higher the consumers’ expenditure, the more likely they buy organic products that are more expensive, but in this study it is not the case. In fact, the respondents who never bought and were not interested in buying the organic tofu belong to the group with an income of Rp2,5million – Rp5 million, while the respondents who ever bought were dominated by the income group of Rp1 million – Rp2,5 million. This is due to the low level of knowledge of the respondents who never bought and were not interested in buying the organic tofu, while the group of respondents who ever bought the products had higher level of knowledge, so they were aware of the health benefits of the products regardless of the prices. The research by Stolz et al. (2011) have a similar view that organic food consumers are very fond of organic products and are not influenced by the price, while for the consumers who are more sensitive to the price factor will prefer the conventional food.
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
The environmental and product internal factors had P-values greater than α = 0,10. This means that they do not significantly influence the purchase decisions of organic tofu. The scores of the environmental factors were not much different among the three types of respondents, indicating that the variables of the environmental attitude do not significantly influence the purchase decisions of organic tofu products. Moreover, most of the respondents are already aware and know that there are things that are related to environmentally friendly and sustainable organic agriculture when buying organic-labelled products. However, these do not guarantee consumers to make purchases of organic tofu products. Meanwhile, internal factors, namely, product quality, taste, packaging, health benefits, nutrition, safety and labeling do not influence purchase decisions of the products. The consumers may already know and believe the advantages of the internal factors of organic products if compared with the plain tofu; however, this does not guarantee that the consumer will purchase organic tofu products.
CONCLUSIONS AND RECOMMENDATIONS Conclusions The potential consumers of organic tofu are among the age of 36–50 year old and highly educated from diploma level to postgraduate level; also, the consumers have knowledge of organic food and organic tofu products. The higher the knowledge of the consumer, the more likely they buy organic tofu products, and they agree that external factors such as price, advertising, personal selling, and sales affect the purchase of the products. In other words, the consumers intend to buy the product if their perception of the product is good enough and in accordance with their needs. Therefore, the entrepreneurs of products organic tofu should be more active in improving their consumers’ knowledge of organic tofu and awareness of eating organic foods and in convincing consumers that organic tofu is proven to be good for them. This can be conducted by creating a blog that contains product information which contains explanations of the production flow starting from the process of obtaining raw materials to the process of producing products ready for consumption. Following this, the certification of organic products should be issued on a regular basis.
235
Recommendations There are a number of suggestions for further research including the addition of other independent variables related to organic food concerning factors that influence consumer purchase decisions on organic tofu product since the independent variables used in this research are still very limited. In regards to variables that are not significant to the factors that influence the purchase decisions of organic tofu such as expenditure, environmental attitude, and product internal factors, it is expected that further research with similar study can be conducted in order to obtain better significant variables.
REFERENCES Arliana A. 2002. Analisis strategi pemasaran tahu pada perusahaan tahu yun yi bogor [skripsi]. Bogor: Institut Pertanian Bogor. Aygen FG. 2012. Sikap dan perilaku konsumen di Turki terhadap makanan organik. International Journal of Business and Social Science 3(18). [Bappenas] Badan Perencanaan Pembangunan Nasional. 2013. Rencana Pembangunan Jangka Menengah Nasional (RPJMN) Bidang Pangan dan Pertanian 2015-2019. Jakarta: Direktorat Pangan dan Pertanian, Bappenas. Bauer HH, Heinrich D, Schafer DB. 2013. The effects of organic labels on global, local and private brands. Journal of Business Research 66(8): 1035–1043. http://dx.doi.org/10.1016/j. jbusres.2011.12.028. Becker N, Tavor T, Friedler L, Bar P. 2015. Two stages decision process toward organic food: The case of organic tomatoes in israel. Journal Agroecology and Sustainable Food Systems 39(3):342–361. http://dx.doi.org/10.1080/21683565.2014.9758 98. Briz T, Ward RW. 2009. Consumer awareness of organic products in Spain: An application of multinominal logit models. Journal Food Policy 34(3): 295–304. http://dx.doi.org/10.1016/j. foodpol.2008.11.004. Cene E, Karaman F. 2015. Analysing organic food buyers' perceptions with bayesian networks: A case study in turkey. Journal of Applied Statistics 42(7):1572–1590. http://dx.doi.org/10.1080/026 64763.2014.1001331.
_______________________ WORLD TECHNOLOGIES _______________________
236
Chen MF. 2007. Consumer attitudes and purchase intentions in relation to organic foods in Taiwan: Moderating effects of food-related personality traits. Journal Food Quality and Preference 18(7): 1008–1021. http://dx.doi.org/10.1016/j. foodqual.2007.04.004. Chen MF. 2009. Attitude toward organics foods among taiwaneese as related to health conciousness, environmental attitudes, and the meditating effects of a healthy lifestyle. British Food Journal 111(2):165–178. http://dx.doi. org/10.1108/00070700910931986. Deliana Y. 2012. Market segmentation for organic products in Bandung WestJava, Indonesia. Research Journal of Recent Sciences 1(3):48– 56. Ditjen Industri Kecil dan Menengah. 2011. Olahan Data Kebutuhan Kedelai untuk Industri Kecil dan Menengah. Jakarta: Kementerian Perindustrian. Ginting E, Antarlina SS, Widowati S. 2009. Varietas unggul kedelai untuk bahan baku industri pangan. Jurnal Litbang Pertanian 28(3):79–87. Hamid SAR, Ghafoor A, Shah TZ. 2012. Analysis of attitude towards green purchase: Pakistan in context. International Journal of Bussines and Social Sciences 3(6):112–115. Hjelmar U. 2011. Consumers purchase of organic food products. A matter of convenience and reflexive practices. Journal Appetite 56 (2): 336–344. http://dx.doi.org/10.1016/j.appet.2010.12.019. Hosmer DW, Lemeshow S. 2000. Applied Logistik Regression. New York: Wiley. http://dx.doi. org/10.1002/0471722146. Irvani D. 2012. Pengembangan Interpretasi Model Logit Multinomial Dengan Metode Analisis Berbasis Peluang [tesis]. Bogor: Institut Pertanian Bogor. Kotler P, Kelvin L K. 2009. Manajemen Pemasaran Jilid I Edisi 13. Jakarta: Penerbit Erlangga Indonesia. Kusumasari. 2012. Pengembangan Interpretasi Model Logit Multinomial Dengan Metode Analisis Berbasis Peluang [tesis]. Bogor: Institut Pertanian Bogor. Lee HJ, Yun ZS. 2015. Consumers’ perceptions of organic food attributes and cognitive and affective attitudes as determinants of their purchase intentions toward organic food. Journal food quality and preference 39(January):259–267. Manurung DI. 2012. Proses keputusan pembelian dan kepuasan konsumen serta alternatif bauran pemasaran terhadap tahu djadi sari di Kota
ENTREPRENEURSHIP MANAGEMENT
Bogor, Jawa Barat [skripsi]. Bogor: Institut Pertanian Bogor. Nachrowi DN, Usman H. 2008. Penggunaan Teknik Ekonometri. Jakarta: PT Raja Grafindo Persada. Noviandi A. 2012. Analisis perilaku konsumen beras organik dan implikasinya terhadap strategi pemasaran [tesis]. Bogor: Institut Pertanian Bogor. Ozguven N. 2012. Organic foods motivation factors for consumers. Journal Procedia-Social and Behavioral Sciences 62:661–665. http://dx.doi. org/10.1016/j.sbspro.2012.09.110. Paul J, Rana J. 2012. Consumer behavior and purchase intention for organic food. Journal of Consumer Marketing 29(6):412–422. http://dx.doi. org/10.1108/07363761211259223. Pomsanam PN, Napompech K, Suwanmaneepong S. 2014. Faktors driving thai customers’ intention to purchase organic foods. Asian Journal of Scientific Research 7(4): 434–446. http://dx.doi. org/10.3923/ajsr.2014.434.446. Rezai G, Zainalabidin M, Mad Nasir S, Phuah KT. 2011. Demographic and attitudinal variabels associated with consumers’ intention to purchase green produced foods in Malaysia. International Journal of Innovation Management and Technology 2(5):401–406. Saleki ZS, Seyedsaleki SM, Rahimi MR. 2012. Organic food purchasing behavior in Iran. International Journal Bussiness Social Science 3(13): 278– 285. Santoso S. 2004. Statistik Multivariat. Konsep dan Aplikasi dengan SPSS. Jakarta: PT. Elex Media Komputindo. Schobesberger BR, Darnhofer I, Somsook S, Vogl CR. 2008. Consumer perceptions of organic foods in Bangkok, Thailand. Journal Food Policy 33(2):112–121. http://dx.doi.org/10.1016/j. foodpol.2007.09.004. Shafie FA, Rennie D. 2012. Consumer perceptions towards organic food. Journal of ProcediaSocial and Behavioral Sciences 49:360–367. http://dx.doi.org/10.1016/j.sbspro.2012.07.034. Shih-Jui Tung, Ching-Chun Shih, Wei-Sherrie, Chen Yu-Hua. 2012. Attitudinal inconsistency toward organic food in relation to purchasing intention and behavior. British Food Journal 114(7): 997–1015. http://dx.doi.org/10.1108/00070701211241581. Stolz H. 2011. Attitudes and behaviour towards food attributes and organic food (a triangular methodological investigation of occasional
_______________________ WORLD TECHNOLOGIES _______________________
FACTORS INFLUENCING THE PURCHASE DECISION OF ORGANIC TOFU
organic consumers) [dissertation]. Witzenhausen: University of Kassel Faculty of Organic Agricultural Sciences. Stolz H, Stolze M, Hamm U, Janssen M, Ruto E. 2011. Consumer attitudes towards organic versus conventional food with specific quality attributes. Wageningen Journal of Life Sciences 58(3–4):67–72.http://dx.doi.org/10.1016/j. njas.2010.10.002. Thogersen J, Marcia DdB, Perin MG, Zhou Y. 2015. Consumer buying motives and attitudes towards organic food in two emerging markets. Journal International Marketing Review 32(3/4):389–
237
413.http://dx.doi.org/10.1108/IMR-06-20130123. Weng ML, Shuang JL, Suryadi K. 2014. Consumers' perceived value and willingness to purchase organic food. Journal of Global Marketing 27(5): 298–307. http://dx.doi.org/10.1080/0891 1762.2014.931501. Widianarko B. 2014. Pangan Organik Tumbuh 5%. Suara Merdeka 12 Juni 2014. http:// www.suaramerdeka.com/v1/index.php/read/ cetak/2014/06/12/264193/PanganOrganikTumbuh-5 [20 November 2014].
_______________________ WORLD TECHNOLOGIES _______________________
Permissions All chapters in this book were first published in IJBE, by Bogor Agricultural University; hereby published with permission under the Creative Commons Attribution License or equivalent. Every chapter published in this book has been scrutinized by our experts. Their significance has been extensively debated. The topics covered herein carry significant findings which will fuel the growth of the discipline. They may even be implemented as practical applications or may be referred to as a beginning point for another development. The contributors of this book come from diverse backgrounds, making this book a truly international effort. This book will bring forth new frontiers with its revolutionizing research information and detailed analysis of the nascent developments around the world. We would like to thank all the contributing authors for lending their expertise to make the book truly unique. They have played a crucial role in the development of this book. Without their invaluable contributions this book wouldn’t have been possible. They have made vital efforts to compile up to date information on the varied aspects of this subject to make this book a valuable addition to the collection of many professionals and students. This book was conceptualized with the vision of imparting up-to-date information and advanced data in this field. To ensure the same, a matchless editorial board was set up. Every individual on the board went through rigorous rounds of assessment to prove their worth. After which they invested a large part of their time researching and compiling the most relevant data for our readers. The editorial board has been involved in producing this book since its inception. They have spent rigorous hours researching and exploring the diverse topics which have resulted in the successful publishing of this book. They have passed on their knowledge of decades through this book. To expedite this challenging task, the publisher supported the team at every step. A small team of assistant editors was also appointed to further simplify the editing procedure and attain best results for the readers. Apart from the editorial board, the designing team has also invested a significant amount of their time in understanding the subject and creating the most relevant covers. They scrutinized every image to scout for the most suitable representation of the subject and create an appropriate cover for the book. The publishing team has been an ardent support to the editorial, designing and production team. Their endless efforts to recruit the best for this project, has resulted in the accomplishment of this book. They are a veteran in the field of academics and their pool of knowledge is as vast as their experience in printing. Their expertise and guidance has proved useful at every step. Their uncompromising quality standards have made this book an exceptional effort. Their encouragement from time to time has been an inspiration for everyone. The publisher and the editorial board hope that this book will prove to be a valuable piece of knowledge for researchers, students, practitioners and scholars across the globe.
_______________________ WORLD TECHNOLOGIES _______________________
List of Contributors Dian Widi Prasetyo Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Idqan Fahmi Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 Yossi Wibisono Study Program of Food Science and Technology, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101
Lukytawati Anggraeni Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 Ujang Suryadi Study Program of Poultry Management Business, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 Maman Sumantri PT Coats Rejo Indonesia Jl. Raya Tajur No.24, Bogor, Jawa Barat 16720
Edi Sucipto Department of Agricultural Production, Study Pogram of Plantation Production, Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 68101
Bambang Juanda Department of Economic, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680
Rina Oktaviani Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680
Dwi Rachmina Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680
Rizal Department of Agricultural Production, Study Pogram of Seed Production Technique, Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 68101
Fauzi Ridwansyah PT. Indosat, Tbk Jl. Medan Merdeka Barat No. 21, Gambir, Jakarta Pusat 10110
Tajudin Noor PT Pertamina (Persero) Jl. Medan Merdeka Timur 1A, Jakarta 10110 Bonar Sinaga Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 TB Nur Ahmad Maulana Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Indah Eko Suryani Politeknik Negeri Jember Jl. Mastrip PO BOX 164, Jember 6810
Imam Teguh Saptono PT. Bank BNI Syariah Jl. Menteng Raya No.29 Jakarta Pusat Dewi Margareth Lumbantoruan PT. Bank Danamon Indonesia, Tbk Jl. Prof. Dr. Satrio Kav. E IV No. 6, Mega Kuningan, Jakarta 12950 Bagus Sartono Department of Statistics, Faculty of Mathematics and Natural Science, Bogor Agricultural University Jl. Meranti Wing 22 level 4-5, Kampus IPB Darmaga, Bogor 16680 Setiadi Djohar PPM School of Management Jl. Menteng Raya 9, Jakarta 10340
_______________________ WORLD TECHNOLOGIES _______________________
LIST OF CONTRIBUTORS
240
Firda Rachma Amalia Study Program of Tourism Business Manajement, Politeknik Negeri Banyuwangi Jalan Raya Jember KM 13, Kabat Banyuwangi Arief Daryanto Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 Hari Rujito Study Program of Agribusiness, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 Homisah PT Perusahaan Industri Ceres Jl Raya Narogong Km 7, Bojong Menteng, Rawalumbu, Bekasi, 17117 Ahmad Mukhlis Yusuf Binus Business School The Joseph Wibowo Center, Hang Lekir I No. 6, Senayan, Jakarta 10270 Tantri Wijayanti Study Program of Tourism Bussiness, Politeknik Negeri Banyuwangi Jalan Raya Jember KM 13, Kabat Banyuwangi Musa Hubeis Department of Management, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5, Campus of IPB Darmaga Bogor 16680 Muksin Study Program of Agribusiness, Politeknik Negeri Jember Jl. Mastrip PO BOX 164 Jember 68101 Isyana Rahayu Graduate Program of Management and Business - Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Dodik Ridho Nurrochmat Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680
Arief Satria Department of Communication and Community Developmen, Faculty of Human Ecology, Bogor Agricultural University Jl. Kamper, Campus IPB Darmaga, Bogor, 16680 Gendut Suprayitno Program Master of Industrial Engineering, National Institute of Science and Technology Campus III ISTN, Jl. PLN Durentiga, Pasar Minggu, Jakarta 12760 Sarah Widyatami Badan Ketahanan Pangan dan Pelaksana Penyuluhan Pertanian, Perikanan dan Kehutanan (BKP5K) Kabupaten Bogor Jl. Sindang Baranang No.416, Bogor 16117 Trias Andati PT Adhimix Precast Indonesia Indonesia Graha Anugerah 3rd Floor, JL. Raya Pasar Minggu, No. 17 A, Pancoran, Jakarta, 12780 Iffatul Ulfah School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Ujang Sumarwan Department of Family and Consumer Sciences, Faculty of Human Ecologi, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga, Bogor 16680 Dodik Ridho Nurrochmat Department of Forest Management, Faculty of Forestry, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga PO Box 168, Bogor 16680 Bimahri Qaulan Tsaqiela Business School, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Yandra Arkeman Department of Agroindustrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University PO BOX 220, Campus IPB Dramaga, Bogor 16602
Achmad Fachrodji Mercu Buana University Jl. Menteng Raya No.29 Jakarta Pusat
Bunasor Sanim Department of Economics, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680
Muhammad Unggul Abdul Fattah The Indonesian National Counter-Terrorism Agency (BNPT) BNPT Kompleks IPSC, Jl. Anyar Desa Tangkil Sentul, Bogor 16180
Vharessa Aknesia Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151
_______________________ WORLD TECHNOLOGIES _______________________
LIST OF CONTRIBUTORS
Kirbrandoko IMMI Management Training & Consulting Jl. Tebet Timur Dalam XXI No.20 Jakarta 12820 Kartika Puspitasari Adiningsih Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Rita Nurmalina Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 MD. Djamaludin Department of Family and Consumer Science, Faculty of Human Ecology, Bogor Agricultural University Jl. Lingkar Akademik, Kampus IPB Darmaga, Bogor 16680 Cecep Mukti Soleh PT Mitra Bahtera Sejati Jl. HR Rasuna Said X-5, Kav 1-2 Kuningan, Jakarta 12950 Imam Teguh Saptono PT Bank BNI Syariah Jl. Jend Sudirman Kav. 1 Lt. 9, Jakarta 10220 Awisal Fasyni Graduate Program of Management and Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Mukhamad Najib Department of Management, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Kampus IPB Darmaga, Bogor 16680 Kirbrandoko IMMI Management Training & Consulting Jl. Tebet Timur Dalam XXI No. 20 Jakarta 12820 Dodi Iskandar PT Asuransi Multi Artha Guna, Tbk Bank Panin Building Lt. 2, Jl. Pakuan No. 14 Baranangsiang, Bogor 16143
241
Rita Nurmalina Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Campus IPB Darmaga, Bogor 16680 Etty Riani Department of Water Resource Management, Faculty of Fisheries and Marine Sciences, Bogor Agricultural University Jl. Agatis Campus IPB, Level 3 Wing 7, Bogor 16680 Artadi Nugraha School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 Sukardi Department of Agroindustrial Technology, Faculty of Agricultural Engineering and Technology, Bogor Agricultural University PO BOX 220, Campus IPB Dramaga, Bogor 16602 Amzul Rifin Department of Agribusiness, Faculty of Economics and Management, Bogor Agricultural University Jl. Kamper, Wing 4 Level 5 Campus IPB Dramaga, Bogor 16680 Mangatas Simanjuntak PT. Salaki Summa Sejahtera Kantor Taman A9 Unit B, Lt.3, Jl. Mega Kuningan Jakarta 12950 Teddy Rusolono Department of Forest Management, Faculty of Forestry, Bogor Agricultural University Academic Ring Road, Campus IPB Dramaga PO Box 168, Bogor 16680 Adetiya Prananda Putra Study Program of Business Management of Tourism, State Polytechnic of Banyuwangi Jl. Raya Jember Km. 13 Labanasem, Kabat, Banyuwangi Tantry Nugroho School of Business, Bogor Agricultural University Jl. Raya Pajajaran, Bogor 16151 16680 Kirbrandoko Ibn Khaldun Bogor University Jl. Kh. Soleh Iskandar KM. 2, Kedung Badak, Tanah Sereal, Bogor 16162
_______________________ WORLD TECHNOLOGIES _______________________
Index A
G
Albasia Wood, 117, 119-121, 123, 125
Global Market, 80, 110
Analytic Hierarchy Process (ahp), 90
Gross Domestic Product (gdp), 136
Agrotourism, 90-95, 97-99
Analytical Hierarchy Process (ahp), 92, 96
Gap Analysis, 1, 3-4, 211
Arena Simulation, 136, 141, 143
I
B
Innovation Media, 145, 153
Balance Scorecard Approach, 165 Batik Tulis, 31, 33, 35, 37, 39, 82 Bullwhip Effect, 136-144 Business Performance, 12-15, 17-21, 118, 123
Indosat Dompetku Business Model, 52-57, 59, 61 Internal Factor Evaluation (ife), 31, 33-34, 90
K
Kawah Putih, 100-103, 105-107 Klassen Typology, 63, 65-66, 69, 72
C
Kredit Usaha Rakyat (kur), 31
Civil Servants, 177-179, 181
L
Capital Structure, 22-30 Coal Transportation Service, 165 Company Performance, 165, 167, 169-173 Competitive Strategy, 37, 52, 61, 216-219, 221-223, 225 Consumer Behavior, 102, 128-129, 180, 182, 228, 230, 236 Consumer Segmentation, 174-175, 177-179, 181 Cooking Spices, 79-80, 82-88 Customer Loyalty, 35, 37, 106-107, 156-158, 162-163, 167, 193-194, 206, 220, 222-223 Customer Purchase Intention, 183 Customer Satisfaction, 93, 156-164, 167, 169-170, 184-185, 187, 189-190, 192-194, 205, 207-208, 212-214 Customer Satisfaction Index (csi), 156, 158, 162, 187, 205, 208, 213-214
Leading Sector, 63-65, 67-69, 71-72 Lending Portfolio, 63-67, 69, 71 Leuwisadeng-bogor, 117, 119, 121, 123, 125 Life Cycle Model, 79-81, 84, 87 Liquidity Ratio, 40 Logistic Regression, 226, 232-233 Lottemart, 136-143
M
Market Leader, 79-80, 83, 86-87, 216-219, 221, 223, 225 Marketing Mix Analysis, 100-101, 103, 105, 107 Marketing Strategies, 57, 90-91, 93, 95, 97, 99, 108, 118, 126-128, 133-134, 154, 177, 203 Measurement System, 165-167, 169, 171-173, 196-197 Multinomial Logistic Regression, 226, 232
D
Development Strategy, 14, 31-33, 38, 61, 64, 81, 90-91, 111, 145, 147, 149, 151, 153, 155, 223
N
Discriminant Analysis, 126, 128-129, 131, 133
Natural Tourism, 95-98, 100-101, 103, 105, 107
E
O
Electricity, 40-51, 63, 65-66, 68, 72
Organic Farming, 226, 231
Entrepreneurship, 12-15, 17-19, 21, 89, 127
Organic Tofu, 226-235, 237
External Factor Evaluation (efe), 31, 35, 90
Oyster Mushroom, 12-16, 18-19
F
P
Feasibility Studies, 73 Fit Analysis, 52-55, 57, 59, 61 Fixed Effect Model (fem), 22 Forest Product Management, 205, 212 Forestry Company Satisfaction, 205-207, 209, 211, 213, 215 Franchise Product, 156-157, 159, 161, 163
Partnership, 1-15, 17-19, 21, 32, 56-57, 73-78, 107, 114, 117-125 Pecking Order Theory, 22-30 Perceived Value, 156, 158-163, 183-185, 187-194, 237 Performance, 1-9, 11-15, 17-21, 33-34, 36, 50-51, 54, 61, 64, 71, 81-82, 90-94, 98-99, 101-102, 107, 112, 117-125, 128, 135, 137, 148, 158, 162-163, 165-167, 169-174, 176,
_______________________ WORLD TECHNOLOGIES _______________________
INDEX
181, 186, 195-205, 207-209, 211-215
243
S
Pleurotusostreatus, 12
Seed Company, 1-3, 5, 7, 9, 11
Pooled Least Square (pls), 22
Service Quality, 3, 10, 91, 97-98, 134, 157-158, 163-164, 183-184, 189, 194, 207, 209, 211-212, 214-215
Portfolio Analyzing, 79 Product Diversification, 117, 124
Socio-cultural Conditions, 111
Product Quality, 14, 18, 37, 84, 87, 181, 183-185, 187-194, 217, 223, 235
Strategic Diagnosis Approach, 52, 54, 57 Strength Weakness Opportunity and Threat (swot), 90
Profitability, 14-15, 22, 24-25, 27-29, 40-42, 46, 50-51, 54, 61, 75, 84, 88, 122, 199
Structural Equation Modelling (sem), 156
Prol Tape Primadona, 216, 223
Supply Chain Management (scm), 196
Supply Chain, 88, 136-144, 147, 154, 172, 195-204
Prospek Mitra Lestari (pml), 73 Psychological Factors, 226 Purchase Decision, 226-229, 231-233, 235, 237 Purchase Intention, 126, 183, 185-186, 190-194
Q
Quantitative Strategic Planning
T
Technological Resources, 145, 153 Trade Partnership, 117, 119, 121, 123, 125 Traditional Cage, 73-78
U
Matrix (qspm), 31, 34, 217
Uleg Chili Sauce, 79-81, 85-88
R
W
Refilled Drinking Water, 174-175, 177, 179, 181
Working Capital, 34, 37, 40-47, 49-51, 111
_______________________ WORLD TECHNOLOGIES _______________________