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Jurnal Strategi Desa Wisata Smart Villag

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The Asian Journal of Technology Management Vol. 12 No.

1 (2019): 48-57

Designing Strategies using IFE, EFE, IE, and QSPM analysis:


Digital Village Case

Dini Turipanam Alamanda1*, Grisna Anggadwita2, Mochammad Raynaldi2,


Santi Novani3, and Kyoichi Kijima4
1Faculty
of Economics, Universitas Garut, Indonesia
2
School of Economics and Business, Telkom University, Indonesia
3
School of Business and Management, Institut Teknologi Bandung, Indonesia
4
Tokyo Institute of Technology, Japan

Abstract. Digital SMEs Village is a program initiated by Telekomunikasi Indonesia. The program is expected to grow entrepreneurial
spirit among business actors, as well as to facilitate business actors to expand their business network by utilizing technological developments
in Indonesia. The common problem of Digital SMEs Village Indonesia today is the number of human resources that still lack the
understanding of using smartphones and computers to interact with consumers in cyberspace. One of the Digital SMEs Village in Bandung
district is the Baraya Digital SMEs Village. This study aims to identify the formulation strategy in the development of the Baraya Digital
SMEs Village by SWOT analysis. Furthermore, Quantitative Strategies Planning Matrix (QSPM) is used to decide and determine
which alternative strategies can best be recommended. The research method used is qualitative method with case study approach by doing
depth-interview to several key actors in the Baraya Digital SMEs Village. The results showed that the Baraya Digital SMEs Village
needs to implement intensive strategy. The development of strategies that need to be implemented as a top priority is market penetration, by
expanding the market share of existing products through online marketing.

Keywords: Digital SMEs Village, cyberspace, SWOT Analysis, QSPM

1. Introduction of information technology is one strategy to


improve business process through speed,
The existence of SMEs (Small Medium accuracy, and efficiency of information
Enterprises) has an important role as a driver exchange in large quantities.
of the country's economy. SMEs contribute
to employment, both in developed and Based on data APJII (2016), the number of
developing countries such as Indonesia, internet users in Indonesia is 132.7 million
especially in reducing unemployment. people or about 51.5% of the total population
Currently, SMEs have become the main of Indonesia amounted to 256.2 million.
agenda of Indonesia's economic development When compared to internet users in
especially since the implementation of the Indonesia in 2014, internet users only 88.1
MEA (ASEAN Economic Community). million users, it shows within 2 years (2014-
Based on data from the Statistics Indonesia 2016) an increase of 44.6 million. From these
(2013), the number of MSMEs reached 57.9 data it can be concluded that the use of
million units spread throughout Indonesia. technology as an opportunity for SMEs in
With the large number of SMEs, business their business process.
actors are required to increase their
competitiveness in order to continue to One of the corporate social responsibility
maintain and develop their business. The use programs of the Telekomunikasi Indonesia is
Digital SMEs Village. Digital SMEs Village
*Corresponding author. Email: ardi_fe@unisan.ac.id
Received: March 14th, 2019; Revised: March 26th, 2019; Accepted: March 26th, 2019
Doi: http://dx.doi.org/10.12695/ajtm.2019.12.1.4
Print ISSN: 1978-6956; Online ISSN: 2089-791X.
Copyright@2019. Published by Unit Research and Knowledge
School of Business and Management-Institut Teknologi Bandung
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The Asian Journal of Technology Management Vol. 12 No. 1 (2019): 48-57

Initiation is an effort to assist SMEs in Baraya Digital SMEs Village requires a


Indonesia in order to modernize and improve business strategy in developing business
the competence of SMEs through ICT, so processes, especially in the utilization of
that SMEs are expected to compete in the information technology facilitated by
global level and contribute to the economic Telekomunikasi Indonesia. According to
growth of Indonesia. Digital SMEs Village Pearce and Robinson (2013), strategy is a set
aims to educate SMEs in the utilization of of decisions and actions that result in
information technology in a comprehensive formulation and implementation of plans
and integrative to support business processes designed to achieve the goals of a company.
in the center of SMEs, so as to realize millions Baraya Digital SMEs Village needs to develop
of SMEs into advanced, independent, and its business strategy to survive in business
modern through ICT. competition and increase its business
potential.
Currently, the number of Digital SMEs
Village in Indonesia reaches 340 villages. Based on the need to determine the strategy
Meanwhile, the number of Digital SMEs business development, EFE (External Factor
Village in West Java reached 104 villages. One Evaluation) and IFE (Internal Factor
of the Digital SMEs Village in West Java is the Evaluation) matrices can be effective
Baraya Digital SMEs Village located in alternative tools. The purpose of this study is
Banjaran, Bandung Regency, West Java. The to determine the external factors (economic,
Baraya Digital SMEs Village formed as a place social, cultural, demographic, environmental
or media to help develop all types of SMEs in and competitive information) and internal
Banjaran, especially business development factors (main strengths and weaknesses in
with the use of technology. Baraya Digital functional areas of business) in Baraya Digital
SMEs Village has a total of 36 actors of SMEs Village. Moreover, to formulate a
SMEs, with a variety of excellent products, strategy that will be used based on the
including fashion products, welding services, attractiveness of the existing alternative
culinary, and wooden toys manufacturing. strategies. Given that business development
requires time and the accuracy of business
Based on the identification, the Baraya Digital planning, the activity of setting up the
SMEs Village experienced several problems, external and internal factors is a crucial stage
including the marketing process that is still that must be flexible, even after the business
conventional despite having an online store. begins its operations.
Generally, SMEs conduct conventional
marketing activities where such activities will
absorb many costs such as opening new 2. Literature Study
branches, engaging in various exhibition
activities, making and distributing brochures, 2.1. Small Medium Enterprises (SME)
and others. Whereas in today's digital era, Although the role of local development is still
SME actors should be aware of the growing adopted in developing countries, SMEs have
e-commerce can be an efficient means to proven successful in creating jobs while
conduct various marketing activities for SME increasing people's incomes. (Fiseha &
products, because the costs incurred will be Oyelana, 2017). In Indonesia there are some
cheaper and wider range. Most of the of the issues were related to internal aspects
production activities undertaken by Baraya like marketing & finance (Tambunan, 2011a),
Digital SMEs Village are still traditional, promotion, technology, human capital
ranging from raw material processing to (Tambunan, 2009), high cost of raw materials,
packing goods. However, the production of and lack of capital (Tambunan, 2011b).
Baraya Digital SMEs Village already has Nugroho, Susilo, Fajar, and Rahmawati (2017)
market share outside Bandung area. state that the decision to use information
technology is not affected by the success of

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Dini Turipanam Alamanda, Grisna Anggadwita, Mochammad Raynaldi, When Digital Technology Knocking at the Door of Indonesian Villagers:
Some Strategies to Move Forward

competitors, but because of the personal 2.3. Digital SME Village


experience of decision makers. ICT for development initiative have been or
are still being undertaken in the developing
The developments of ICT-based countries (Atieno & Moturi, 2014). A process
entrepreneurs need to increase its growth and model that aims to describe and explain how
performance (Yuldinawati, Tricahyono, SME entrepreneurs is examined by Li, Su,
Anggadwita, & Alamanda, 2018). Small Zhang, and Mao (2017) with support from the
businesses if managed by people who digital platform service provider, drive digital
understand information technology will be transformation through managerial cognition
able to improve organizational efficiency and renewal, managerial social capital
effectiveness (Rahab & Hartono, 2012). development, business team building, and
organizational capability building.
2.2. Smart Village
The emerging concept of Smart Villages Digital Village Projects were initiated with one
refers to rural areas and communities which major goal in mind and that is to bridge the
build on their existing strengths and assets as digital gap that exists between rural and urban
well as on developing new opportunities areas (Atieno & Moturi, 2014). The hope of
(European Commission, 2014). It is possible implementing the digital village program is
for residents in a smart village to use that villages are able to create a profile and
technology in line with the development of potential of their villages in an integrated
their infrastructure (Zavratnik, Kos, & Duh manner as well as publishing it to various
2018). In Malaysia, the UN's Sustainable information media (Telkomuniversity, 2018).
Development Solutions Network (SDSN) is
quite aggressive in improving people's welfare 2.4. Strategy Business Development
with the development of smart villages The advantages of using the EFE and IFE
(AAAS & Eurekalert, 2014). In Indonesia, the matrices are (Senthilkumar et al., 2014):
indicator of the success of the smart village 1) It does not require certain skills
program is if there are supporting elements because it is easy to use;
that include 5 smart technologies, namely: (1) 2) It can avoid misunderstanding
smart sensors, (2) communication from one because it is easy to understand;
machine to another, (3) cloud computing, (4) 3) It focuses on the key factors both
media social, and (5) Geographical
Information System (GIS) technology internal and external that affect the
(Faujiah, 2017). company's strategy;
4) It can be used to construct other
The project of smart village is developed in analyzes such as SWOT, IE matrix,
several villages in the world. Smart digital comparison matrix and GE matrix.
transformation of village projects are based
on funding from Interreg Alpine Space at SWOT analysis and Quantitative Strategic
Alpin Space. The partnership consists of Planning Matrix (QSPM) are advanced
most of the regional territory (Switzerland, analyzes that commonly used to improve
Austria, Germany, Italya, France, Slovenia) managerial strategy (Rezazadeh et al., 2017;
(Zavratnik et al., 2018). Other examples are Zulkarnain, Wahyuningtias, & Putranto,
Tasik (lake), Kenyir resort area and Cyberjaya 2018). In addition to the advantages, there are
in Malaysia (AAAS & Eurekalert, 2014). In also weaknesses that need to be considered,
Indonesia, smart villages are developing in among others (Capps & Glissmeyer, 2012):
Geluran Taman Sidoarjo (Faujiah, 2017), 1) IFE and EFE matrices can be
Lamajang Village (West Java) and Temulus replaced almost entirely with PEST
Village (Middle Java). analysis, SWOT analysis, competitive

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The Asian Journal of Technology Management Vol. 12 No. 1 (2019): 48-57

profile matrix, and some other b. And for the EFE Matrix: 1 = Bad
analyzes; response; 3 = Response above
2) Both analyzes only identify and average; 2 = Average response 4 =
evaluate factors but do not help the Exceptional response
company directly in determining the
next strategic step or the best
3.2 Stage 2: SWOT and TOWS Matrices
strategy;
EFE and IFE Matrices are used to compile
3) Each factor must be very specific to the SWOT Matrix. Then the TOWS matrix is
avoid confusion about the factors used to match the development of 4
must be determined. strategies, namely the S-O strategy (Strength -
Opportunity), W-O (Weakness - Opportunity)
strategy, SS-T strategy (Strength - Threat) and
3. Methodology W-T (Weakness - Threat) strategy. Then, an
IE matrix analysis is used to position a
This research used qualitative method with strategic business unit (SBU) of a company
case study approach. In-depth interviews were into a matrix of 9 cells.
conducted towards some key-informants. The
informants are all elements involved in the 3.3 Stage 3: QSPM Matrix
Baraya Digital SMEs Village which is divided The last step, a QSPM analysis is the only
into four parts of communities of knowledge analytical technique in the literature designed
but only represented by two communities of to determine the relative attractiveness of
knowledge, namely, community of practices alternative measures (David, 2011). This
represented by experts, and community of technique objectively shows which strategy is
interests represented by innovator. In best.
addition, secondary data is obtained through
articles listed in journals or scientific papers or After identifying alternative strategies that
other data sources. must be considered by the organization to be
implemented. In QSPM the determination of
3.1 Stage 1: EFE and IFE Matrices Total Attractiveness Scores-TAS is also
The results of interviews toward 5 key- carried out with the following conditions:
persons representing the community of (1) Value 1 = not attractive
knowledge and community of interest (2) Value 2 = rather interesting
produced 10 external factors and 9 internal (3) Value 3 = quite interesting
factors that needed further analysis. (4) Value 4 = very interesting
1) Weight is obtained from the results of TAS is obtained by multiplying weights by
the average of informants’ answer attractiveness scores.
regarding how important these factors
are compared to overall internal /
4. Results and Discussion
external factors;
2) Determination of rating on these 4.1. EFE and IFE Matrix Analysis
factors is done by filling out a After the calculation of the weight and rating
questionnaire with the following value of each internal and external factors,
provisions: then obtained the score of each factor shown
a. For IFE: 1 Matrix = Big weakness; in Table 1 and Table 2:
3 = small strength; 2 = small
weakness; 4 = Great power.

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Dini Turipanam Alamanda, Grisna Anggadwita, Mochammad Raynaldi, When Digital Technology Knocking at the Door of Indonesian Villagers:
Some Strategies to Move Forward

Table 1.
IFE Matrix

Internal Factors
Strength Weight Rating Score
Opening jobs, because anyone can become a reseller 0.2 3 0.6
The biggest income from fashion products 0.2 4 0.8
Production activities went well 0.02 4 0.08
Ease and low cost in marketing the product 0.1 4 0.4
Strong brand 0.2 4 0.8
Weakness
Not all members understand the technology 0.15 4 0.6
Expenditure is unpredictable 0.02 3 0.06
Resources are easily imitated 0.1 2 0.2
It is not easy to gain trust from consumers 0.01 2 0.02
Total 1.0 3.56

Table 2.
EFE Matrix

External Factors
Opportunity Weight Rating Score
Increased value proposition 0.15 4 0.6
There is another revenue stream 0.1 4 0.4
There are various trainings and seminars to add insight 0.15 3 0.45
Technology helps efficiency in general 0.1 4 0.4
Opportunity cooperation with new partners 0.1 4 0.4
Online media as a means of increasing business revenue 0.05 3 0.15
Ease in getting suppliers 0.1 4 0.4
Broad market segment 0.05 4 0.2
Threat
Not all products are in accordance with the wishes of 0.1 4 0.4
consumers
Many competitors 0.1 4 0.4
Total 1.0 3.8

Values range from 0.1 - 4.0, with an average of current opportunities and minimizes the
of 2.5. An average total below 2.5 represents possible effects of external threats. Based on
a weak internal organization, whereas above the above table, the results of the calculation
2.5 indicates a strong internal position. In the score is 3.8, which means Baraya Digital SMEs
above table obtained the average result is 3.56 Village respond very well to the opportunities
which means the position of Internal Baraya and threats that exist. Baraya Digital SMEs
Digital SMEs Village is in a strong position. Village realizes the great opportunity of the
business of selling products through online
In the Table 2, the highest score for an media, while business threats such as business
organization is 4.0 indicating that the competition will always happen, but it can be
organization responds very well to a motivation to always work better, and create
opportunities and threats. In other words, new innovations according to the
corporate strategy effectively takes advantage development of customer needs and lifestyle.

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The Asian Journal of Technology Management Vol. 12 No. 1 (2019): 48-57

gain strategy in the development of Baraya


The next step is to map the IE matrix based Digital SMEs Village.
on the total IFE and EFE matrix scores to

Figure 1.
IE Matrix

Figure 1. shows that Baraya Digital SMEs transact. In addition, the marketing coverage
Village is in division I of cell 1, that is strategy for Baraya Digital SMEs Village will be wider
which can be explained as growth and build, by reaching various customer segments.
and strategy development used is intensive
strategy (market penetration). Baraya Digital 4.2 SWOT/ TOWS Analysis
SMEs Village develops a business with online After getting a portrait of business model
marketing priority, as it is more profitable and Baraya Digital SMEs Village then perform a
reduces marketing costs. In the current era of SWOT analysis of the business model canvas.
technology, online business will make it easier Figure 1 below is the map of SWOT Matrix.
for customers and producers to interact and

Figure 1.
SWOT Matrix

The TOWS analysis ensures that we can take


into account and make good use of every 1) S–O
opportunity outside for business a) Expand order distribution network
improvement. At the same time we can also (O4, O5, O6, O7, O8, S1, S4)
know and utilize internal potential. By
b) Optimization of god company name
analyzing the external we are also able to
anticipate challenges from any external for business actors incorporated in
changes, even changing those (challenges) into SMEs Digital Village with better
new opportunities. The following are the management (O1, S5)
results of the TOWS analysis: c) Open sewing lessons (O2, S2)

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Dini Turipanam Alamanda, Grisna Anggadwita, Mochammad Raynaldi, When Digital Technology Knocking at the Door of Indonesian Villagers:
Some Strategies to Move Forward

d) Improving HR Performance by 4) W–T


providing regular training and seminar a) Conducting recruitment process to get
opportunities (O3, S3) employee who have competence in
e) Providing the best service (O8, S3, S5) their field (T1, W1)
2) W – O b) Active in seeking information on
a) Maximizing the use of information various technological advances to
technology in production and compete (T2, W1)
marketing process to increase
4.3. QSPM Analysis
business revenue (O4, O6, W1, W6)
Based on SWOT/ TOWS analysis, there are
3) S – T alternative strategies to support the economic
a) Maintaining product quality to remain growth of Baraya Digital SMEs Village by
consumers choice (T1,S3) utilizing technology. To determine the right
b) Always innovate to stay competitive strategy alternative as a priority, QSPM
(T2, S3) analysis is performed. The QSPM analysis can
be seen in Table 3.

Table 3. QSPM Matrix

No Strategy Alternative Weight AS TAS Rating


1 Expand order distribution network 0.1 2.5 0.25 7
2 Optimization of good company name for business 0.1 3 0.3 5
actors incorporated in SMEs Digital Village with
better management
3 Open sewing lessons 0.05 3 0.15 9
4 Improving HR performance by providing regular 0.15 4 0.6 1
training and seminar opportunities
5 Providing the best service 0.1 2 0.2 8
6 Maximizing the use of information technology in 0.12 3.1 0.37 2
production and marketing processes to increase
business revenue
7 Always innovate to stay competitive 0.1 3.1 0.31 4
8 Maintaining product quality to remain consumer 0.13 2 0.26 6
choice
9 Conducting recruitment process to get employees 0.05 2 0.1 10
who have competence in their field
10 Active in seeking information on various 0.1 3.4 0.34 3
technological advances to compete

Selection of alternative strategies with QSPM villages in the framework of optimization


method using the attractiveness score (AS) through:
and total of attractiveness score (TAS). The 1) Improving HR performance by
calculation of QSPM analysis is based on the providing regular training and seminar
selection of the most preferred strategic opportunities; as Wulandari and
alternatives by the respondents. Based on the Alamanda (2012); and Engetou (2017)
results of the QSPM, to develop Indonesia state that training and development is a
from the periphery by strengthening regions necessity in every companies particularly
and villages within the framework of a unitary for the unskilled or the less experience
state, in Baraya Digital SMEs Village, it is employees.
necessary to implement a strategy to develop

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The Asian Journal of Technology Management Vol. 12 No. 1 (2019): 48-57

2) Maximizing the use of information 2014), especially the village of Ikisaya, built
technology in production and marketing the Smart Village concept with a focus on the
processes to increase business revenue; as main problems in their area, namely electricity.
stated by Court (2015) that new Both have slices in activities where public
technology tools are making adoption by education or value reform is part of the Smart
the front line much easier, and that’s Village ecosystem while in Kenya (Atiano &
accelerating the organizational adaptation Moturi, 2014), this education is needed to
needed to produce results. support the sustainability of renewable energy
3) Active in seeking information on various in the area. The slices between the two
technological advances to compete; the countries that adopted this different approach
increasing number of infrastructure of imply that the ecosystem approach can work
search, expansion and dissemination of in harmony with the sectoral approach.
information will be able to increase the
number of information seekers. (Cooke,
2001) 5. Conclusion
4) Always innovate to stay competitive; it
means innovation emerges, and under Based on the research, the results of the
which circumstances innovation can analysis with the IFE, EFE, IE, and QSPM
serve as a source for competitive matrix were made to decide and determine the
advantage (Brem, Maier, & best strategy recommended to Baraya Digital
Wimschneider, 2016). SMEs Village. The main strategy generated is
5) Better company name for business actors the intensive strategy (market penetration) by
incorporated in SMEs Digital Village developing a business with priority online
with better management; brand names marketing because it can reduce costs. Baraya
can influence consumer choice Digital SMEs Village expected to be an
(Hillenbrand, Alcauter, Cervantes, & example and also help the economic growth
Barrios, 2013). of villages in Indonesia. The result of the
6) Maintaining product quality to remain QSPM matrix is to improve HR performance
consumer choice; the positive the by providing regular training and seminar
perception of the quality, the greater the opportunities. Another alternative strategy is
volume of sales (Putra, Hartoyo, & to increase revenue by producing and
Simanjuntak, 2017). marketing products and services by utilizing
7) Expand order distribution network; technological developments. The addition of
network adjustments creates significant the number of employees who are competent
savings for institutions (Greenland, in the handling of work is an alternative
1995). strategy that get the last rating, because it is
8) Providing the best service; considered will add the cost structure on the
9) Open sewing lessons; Baraya Digital SMEs Village.
10) Conducting recruitment process to get Strengthening the business model in the
employees who have competence in their Baraya Digital SMEs Village is expected to
field. expand the business by maximizing
opportunities and anticipate existing threats.
From literature studies on the Smart Village In the customer segment, Baraya Digital
approach that exist in the world and also by SMEs Village can expand the market by
looking at the indicators used to calculate exploiting the growth of e-commerce. In
sustainable societies, it appears that each addition, key activities by opening sewing
approach has its own strengths. As seen in the lessons as a form of expanding the
use of Smart Village terminology, India and proportion of value to specific customer
Kenya have different definitions. India built segments can also be conducted to add new
the concept of Smart Village through revenue streams. Other key activities can be
ecosystems while Kenya (Atieno & Moturi, done by improving HR performance by

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Dini Turipanam Alamanda, Grisna Anggadwita, Mochammad Raynaldi, When Digital Technology Knocking at the Door of Indonesian Villagers:
Some Strategies to Move Forward

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