SWOT Analysis to Develop Market Share in SMEs of Hand-Made

Fashion

Novi Marlena, Renny Dwijayanti and Albrian Fiky Prakoso

Economy Faculty, Universitas Negeri Surabaya, Surabaya, Indonesia

Keywords: SWOT analysis, creative handmade, market share.

Abstract: This study aims to formulate a strategy through SWOT analysis in SMEs of hand-made fashion. This research

type is explanatory with data collection technique through observation and depth interview. The results of the

research by using the SWOT analysis of strengths, weaknesses, opportunities and threats obtained the result

that in SMEs of hand-made fashion should provide product variations and design innovation according to

market developments, improve the quality of packaging more attractive, expand the marketing area, maximize

marketing efforts by adding nesting for advertising and sales promotion so as to enlarge existing market share.

1 INTRODUCTION

Small and medium enterprises (SMEs) have a

strategic role in development national economy,

because in addition to play a role in economic growth

and employment absorption also play a role in the

distribution of development results. Small and

Medium Industry commonly known as Small

Medium Enterprises (SMEs) are significantly

important role in promoting economic growth in

many countries (Mahmood and Norshahafizah, 2013:

82). This sector is also more resilient in facing the

crisis

There are several factors that cause SMEs still

encountered obstacles and problems, among others as

follows: a) Internal factors of SMEs are as follows:

lack of capital rely on the capital of the owner whose

numbers are very limited, restricted human resources

most small businesses grow traditionally and are

family businesses that are hereditary, the weakness of

business network and market penetration because the

resulting product is very limited and has a less

competitive quality. b) external factors of SMEs are

as follows: the business climate is not fully

conducive, limited lack of facilities and

infrastructure, lack of information related to the

advancement of science and technology, implications

of regional autonomy, the nature of products with

short lifetime, limited market access will cause the

resulting product cannot be marketed competitively

in both national and international markets. (Rosid,

2012).

Nowadays, everyone is required to have the skills

in order to have high competitiveness. The lack of

employment makes some people un employed in

addition to the limitations of soft skill, capital and

entrepreneurial desire is an obstacle that is not easily

overcome. However, a group of great women initiated

by Ms. Kartini, armed with embroidery skills in

Kedurus area of Surabaya, formed a self-help group

by establishing Kedurus Sejahtera SMEs (KESRA

SMEs) as a platform to aspire mothers especially

around Kedurus to create a craft that has high

economic value. KESRA SMEs produce handmade

fashion like that wallet, cosmetic wallet, bag etc.

KESRA SMEs in manage is still very simple with

familial system. Employees who work come from the

community around the home area owner KESRA

SMEs Kedurus area. In there had many problems in

operating the business related which is financial

management that is still manual, lack of product

variation, less attractive packaging, lack of

production capacity, less production sites, some raw

materials that must be purchased from Jakarta and

marketing system is still simple like sales by order.

Therefore, the development of SMEs should get

attention from both the government and the

community in order to grow more competitive. To

achieve competitive advantage, KESRA SMEs

should to internal and external environment analysis.

One of most with SWOT analysis can to develop

market share.

This study aims to describe 1) factors affecting

internal and external environmental conditions in

KESRA SMEs of handmade fashion, 2) formulate

274

Marlena, N., Dwijayanti, R. and Prakoso, A.

SWOT Analysis to Develop Market Share in SMEs of Hand-Made Fashion.

In Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship (ICEEE 2017), pages 274-278

ISBN: 978-989-758-308-7

strategy through KESRA SMEs SWOT analysis to

expand market share in SMEs of hand-made fashion.

2 LITERATURE REVIEW

The performance of the small business sector is

affected by two main factors namely the factors that

exist in the external and internal environmental

factors (Musran Munizu, 2010). Every business must

be analysis internal and external environment to

achieve competitive advantage. Having identiﬁed

these factors strategies are developed which may

build on the strengths, eliminate the weaknesses,

exploit the opportunities or counter the threats.

SWOT analysis aims to identify the strengths and

weaknesses of an organization and the opportunities

and threats in the environment. Having identiﬁed

these factors strategies are developed which may

build on the strengths, eliminate the weaknesses,

exploit the opportunities or counter the threats. The

strengths and weaknesses are identiﬁed by an internal

appraisal of the organization and the opportunities

and threats by an external appraisal.

The same opinion is found by internal factors can

described aspects of HR (managers and employees);

financial aspects; technical aspects of production; and

marketing aspects (Musram Munizu, 2010). The

external environment divides into three main

components, namely, the general environment,

industrial environment, and the competitive

environment (Hitt, Ireland, and Hoskisson 2011: 33).

The Strengths Weaknesses Opportunities Threats

(SWOT) Matrix helps managers develop four types

of strategies (David, 2011:330)

1. SO (strengths-opportunities) strategies, use a

firm’s internal strengths to take advantage of

external opportunities

2. WO (weaknesses-opportunities) strategies, aim

at improving internal weaknesses by taking

advantage of external opportunities

3. ST (strengths-threats) strategies, use a firm’s

strengths to avoid or reduce the impact of

external threats

4. WT (weaknesses-threats) strategies, are

defensive tactics directed at reducing internal

weakness and avoiding external threats

Table 1: SWOT Matrix

IFAS

EFAS

Strengths (S) Weaknesses (W)

describe strengths

internal factor

Describe

weaknesses

internal factor

Opportunities

(O)

SO strategies

WO strategies

describe

opportunities

internal factor

use a firm’s internal

strengths to take

advantage of

external

opportunities

aim at improving

internal

weaknesses by

taking advantage

of external

opportunities

Threats (T) ST strategies WT strategies

describe threats

internal factor

use a firm’s

strengths to avoid or

reduce the impact of

external threats

are defensive

tactics directed at

reducing internal

weakness and

avoiding external

threats

Source: Rangkuti (2013:83)

There are eight steps involved constructing a

SWOT matrix (David, 2011:330):

1. List the firm’s key external opportunities

2. List the firm’s key external threats

3. List the firm’s key internal strengths

4. List the firm’s key internal weaknesses

5. Match internal strengths with external

opportunities

6. Match internal weaknesses with external

opportunities, and record the resultant WO

Strategies

7. Match internal strengths with external threats,

and record the resultant ST Strategies

8. Match internal weaknesses with external threats,

and record the resultant WT Strategies

3 METHODS

This research use explanatory research type. The

object of this research is Kedurus Sejahtera SMEs

(KESRA SMEs) located on Jl. Raya Mastrip No.34

Karangpilang, Surabaya. Data collection techniques

used observation, documentation, and depth

interviews. The data used in this study comes from

primary data that is the result of depth interviews with

the owner, employees and surrounding communities.

Data processing in this research use three stages of

research, which are 1) conducting internal

environment condition analysis (strengths and

weaknesses) and external environment (opportunities

and threats), 2) assessing the relevance of strategy

that has been applied in Kedurus Sejahtera SMEs

SWOT Analysis to Develop Market Share in SMEs of Hand-Made Fashion

275

(KESRA SMEs) with the problems faced with SWOT

analysis, and 3) formulate strategies recommendation

that should be done by Kedurus Sejahtera SMEs

(KESRA SMEs) to maintain its existence in order to

achieve competitive advantage.

Figure 1: Framework stages of research

Figure 1 explains that the recommendation

strategy that can be offered to KESRA SMEs to

achieve competitive advantage one of them through

SWOT analysis is based on SWOT matrix through

the analysis of SO strategies, WO strategies, ST

strategies, WT strategies. Environmental conditions

in KESRA SMEs of hand-made fashion from internal

environment and external factors. Factors affecting

KESRA SMEs in identification are then translated

into a SWOT matrix.

4 RESULTS AND DISCUSSION

4.1 Finding 1: Factors affecting internal

and external environmental

conditions in KESRA SMEs of

handmade fashion

Sofyan and Ina (2015) explained that there is a

significant relationship between internal and external

analysis on the performance of small and medium

industries (SMEs).

Internal environment analysis in KESRA SMEs

of handmade fashion describing two factor there are

strength and weakness factor.

a). Strength factor:

1. Competitive price

2. Good product quality

3. Employees have skills

4. Financial strength

5. Raw materials are easy to obtain

6. Sufficient production equipment

7. Unique design with embroidery technique

b). Weakness factor:

1. Financial management that is still manual

2. Lack of product variation

3. Less attractive packaging

4. The marketing system is still simple

5. Lack of production capacity

6. The existence of raw materials that must be

purchased from Jakarta

7. Less production sites

External environment analysis in KESRA SMEs

of handmade fashion can be describing two factor

there are opportunity and threat factor.

a). Opportunity factor:

1. Loyal customers

2. Larger market demand

3. Larger market share

4. Full government support

5. Patent

6. Promotion with WOM (word of mouth) is

more effective

b). Threat factor:

1. The competitors that are similar in the

market

2. Ext employees who become competitors

3. Raw material prices increasing

4. Marketing technology used by growing

competitors

5. The development of products (wallets and

bags) in new creations

6. Regional minimum wages increasing

4.2 Finding 2: Formulate strategy

through SWOT analysis to expand

market share in KESRA SMEs of

hand-made fashion

Alternative development strategies formulated for

KESRA SMEs of hand-made fashion based on the

results of SWOT analysis were illustrated:

Table 2: SWOT Matrix in KESRA SMEs

Strengths (S) Weaknesses (W)

1. Competitive

price

2. Good product

quality

3. Employees

have skills

1. Financial

management that

is still manual

2. Lack of product

variation

3. Less attractive

packaging

Internal factor External factor

SWOT analysis

Strategies recommendation

Environmental conditions in KESRA SMEs

of hand-made fashion

ICEEE 2017 - 2nd International Conference on Economic Education and Entrepreneurship

276

Table 2. Cont.

4. Financial

strength

5. Raw materials

are easy to

obtain

6. Sufficient

production

equipment

7. Unique design

with

embroidery

technique

4. The marketing

system is still

simple

5. Lack of

production

capacity

6. The existence of

raw materials that

must be

purchased from

Jakarta

7. Less production

Opportunities

(O)

SO strategies WO strategies

1. Loyal

customers

2. Larger

market

demand

3. Larger

market share

4. Full

government

support

5. Patent

6. Promotion

with

WOM (word

of mouth) is

effective

1. Expand the

market share

(S1, S4, O3,04)

2. Increase the

production

capacity (S4,

S5, S6, O2)

3. Expanding

promotion mix

(S2, S4, O1,

O6)

4. More variation

of design (S3,

S7, O3)

1. Adding design

variations for new

products (W2,

O3, O5)

2. Increase

production

capacity (W5,

O3, O5)

3. Patented product

(W4, O1, O4)

Threats (T) ST strategies WT strategies

1. The

competitors

that are

similar in the

market

2. Ext

employees

who become

competitors

3. Raw material

prices

increasing

4. Marketing

technology

used by

growing

competitors

5. The

development

of products

(wallets and

bags) in new

creations

6. Regional

minimum

wages

increasing

1. Perform

flexible market

penetration

through price

(S1, T1)

2. Maintaining

product

positioning (S7,

T2, T5)

1. Create attractive

packaging (W3,

T1, T5)

2. Creating an

integrated

marketing system

by utilizing

modern

technology (W4,

T1, T4)

Based on the results of table 2 SWOT matrix

analysis (strength, weakness, opportunities, and

threats) that KESRA SMEs has compared

systematically and structured with the aim of forming

four strategies, namely SO, WO, ST, and WT

strategies described below this:

1. SO (Strengths Weakness) strategy

The SO strategy or power opportunity strategy

is a strategy that uses the power of KESRA

SMEs to take advantage of existing

opportunities into alternative strategies such as

the following:

a. Expand the market share

b. Increase the production capacity

c. Expanding promotion mix

d. More variation of design

2. ST (Strengths Threat) strategy

ST strategy or force threat strategy is a strategy

that uses the power of KESRA SMEs to

anticipate threats from the external environment

into alternative strategies as follows:

a. Adding design variations for new products

b. Increase production capacity

c. Patented product

3. WO (Weakness Opportunity) strategy

WO strategy or weakness opportunity strategy

is a strategy that minimizes the weakness of

KESRA SMEs by taking advantage of

opportunities from external environment to

alternative strategy as follows:

a. Perform flexible market penetration through

price

b. Maintaining product positioning

4. WT Strategy

WT strategy or a weakness threat strategy is a

strategy that minimizes the weakness of KESRA

SMEs by anticipating threats from the external

environment into alternative strategies as

follows:

a. Create attractive packaging

b. Creating an integrated marketing system by

utilizing modern technology

Based on the results of research conducted by

(Moses Hubeis and Najib, 2008). The company's

strategy is a strategy developed in a business so that

the company will compete by changing the distinctive

competence into competitive advantage.

Intensive strategy for KESRA SMEs can describe:

1. Market Penetration Strategy

This strategy can be purely or merged with other

strategies. The market share for this product is

quite large in the industry of embroidery

craftsman ship manufacture, but this application

is less maximal due to lack of corporate

marketing system. However, market penetration

strategies increase the number of salespeople,

increase spending on advertising, offer

SWOT Analysis to Develop Market Share in SMEs of Hand-Made Fashion

277

extensive promotional products or a

combination of other marketing efforts.

2. Market Development Strategy

The market development strategy is to expand

the marketing area of KESRA SMEs to new

geographic areas that have not been reached by

the number of people who have purchasing

power and are likely to become potential buyers.

This can be done outside the area of Surabaya or

East Java. Most closely for example trying to

establish relationships with existing partners in

Sidoarjo, to market the product. Not only can

that, opening a new outlet in a new area also be

an alternative strategy. The right distribution

channel is a key support for the implementation

of this strategy. Add more design variation

while maintaining unique designs with

embroidery techniques and festoon puncture,

increase production capacity, fixed the

packaging by adding the brand/logo that became

the hallmark of KESRA SMEs.

3. Product Development Strategy

This product development strategy can be done

by KESRA SMEs by improving packaging with

an attractive appearance to support the different

product sizes. In addition, the company is also

biased to provide a new and varied design, it is

intended to anticipate the saturation of

consumers will be a product design that does not

change and monotonous though the customer

who have been loyal to the company remains a

potential buyer, Expand the marketing area,

create a well-structured and organized

marketing.

5 CONCLUSIONS

Strategies recommendation using swot analysed to

develop market share in KESRA SMEs of handmade

fashion should be Provide product variations and

design innovation according to market developments.

Improve the quality of packaging more attractive.

Expand the marketing area with promotional mix.

Maximize marketing efforts by adding nesting for

advertising and sales promotion so as to enlarge

existing market share. Therefore, the advice for this

research is a KESRA SMES engaged in trading

business, SMEs should keep up to date information

about the market.

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