Internal and External Strategic Management Model Approach to the

Increase of SMEs Competitiveness: Case Study on New Village and

Dusun Tuntungan 1 District Deli Serdang Sumatera Utara

Duma Megaria Elisabeth, Rintan Br. Saragih, and Rike Yolanda Panjaitan

Lecturer of the Faculty Economic , Universitas Methodist Indonesia

Keywords: SMEs , Strategic Management , Empowerment, Financial Report, ETAP

Abstract: As a trigger and buffer of the national economy , Micro Small and Medium Enterprises (SMEs) become a

very important part that needs to be developed. This situation is supported by SMEs activities that cover al

most of business . Based on research in several regions in North Sumatra , the SMESs are faced by complex

problems in similarity. The results indicated the problems as follow the lack of human resources skills in

developing the business, limited business capital, business competition , poor motivation of workers, lack of

standards that guarantees the quality of SMESs, limited access of marketing, readiness to face the challenges

in external environment, innovation and utilization of information technology that has not been maximized .

This situation becomes more complicated because the quality of financial reports presented by SMEs is still

limited to only revenues and expenditures .

This research uses a literature study to describe and identify solutions through evaluating the company's

internal and external strategy factors. T his strategic management approach, models are expected to provide

strategic formulation to increase of the competitiveness of SMEs in order facing the global market. The other

purpose is to determine the problems of SMEs while the preparation of entity-based financial reports without

the existence of public accountability ( ETAP).

1 INTRODUCTION

The existence of SMEs (Micro, Small and Medium

Enterprises) provides a breath of fresh air for the

growth of the Indonesian economy because it helps

the community's economic growth and as its output is

an increase in people's welfare. Not a few people are

employed in SMEs businesses and this has a positive

impact on reducing unemployment. For this reason,

SMEs businesses must move up the class and make it

the basis of the people's economy so as to create

economic stability and independence. Various

problems faced by SMEs actors, including

management, production, marketing, financial and

legal issues (M. Azrul Tanjung, 2017) which resulted

in the difficulty of SMEs in accessing various

economic sources. SMEs productivity and innovation

must be improved all the time so that it has a

competitive advantage. SMEs are required to have

high competitiveness where this can be realized

through the study of the application of internal and

external strategic factors both financial and non

financial effectively and efficiently. The expected

result is an increase in SMES human resources (HR)

that are reliable and have high mastery of knowledge.

Referring to some research results in the field of

SMES, it shows that the problems faced by SMES

actors are very complex. As presented in the

following table

Table 1. The Problem of SMEs

No Business

fields

Location Problem

1 Tapioca

flour

Kediri The lack of HR

skills, limited

business capital,

dependence on

middlemen , has not

yet formed a

usiness group

2 Skin

crackers

Tanah

Datar, West

Sumatra

There are no brands

/ labels in the

packaging, no

marketin

channels

Elisabeth, D., Saragih, R. and Panjaitan, R.

Internal and External Strategic Management Model Approach to the Increase of SMEs Competitiveness: Case Study on New Village and Dusun Tuntungan 1 District Deli Serdang Sumatera

Utara.

DOI: 10.5220/0009326605550562

In Proceedings of the 2nd Economics and Business International Conference (EBIC 2019) - Economics and Business in Industrial Revolution 4.0, pages 555-562

ISBN: 978-989-758-498-5

555

3 Shoes Field Lack of use of

technolog

4 Bread and

cake

Jabodetabek Marketing functions

are not optimal,

limited capital, lack

of HR skills

5 Karawo

Crafts

Gorontalo. Limited capital, low

skills and

knowled

e of HR

6 Copper

handicrafts

Tumang

Village -

Boyolali

enc

Limited capital,

distribution

channels

1.1 Problem Identification

Here are some of the problems that can be identified:

1. Factor marketing function that is not optimal

2. Factors of limited business capital

3. The less strategic location of production

access factors

4. Product factors require special treatment in the

field of production

5. F actors do not increase company HR skills .

6. Recording Accounting / financial statements

2 LITERATURE REVIEW

2.1 SMEs Business Profile

Micro, Small and Medium Enterprises (SMEs) have

an important role in the economy in Indonesia. SMEs

have a proportion of 99.99% of the total business

operators in Indonesia or as many as 56.54 million

units. Micro, Small and Medium Enterprises have

been able to prove their existence in the economy in

Indonesia. When the storm of the monetary crisis hit

Indonesia in 1998 small and medium scale businesses

were relatively able to survive compared to large

companies. Because the majority of small-scale

businesses are not too dependent on large capital or

external loans in foreign currencies. Thus, when there

is fluctuation in exchange rates, large-scale

companies that generally always deal with foreign

currencies are the most potentially subject to crisis

impact.

2.2 Micro, Small and Medium

Enterprises (SMEs)

According to Law Number 20 Year 2008, the

definition of SMEs is as follows:

1. Micro business is productive business owned

by individuals and / or individual business

entities that meet the criteria for micro

business.

2. Small businesses are productive economic

businesses that are independent, carried out by

individuals or business entities that are not

subsidiaries or branch companies that are

owned, controlled, or become a direct or

indirect part of a medium-sized business or

large business.

3. A medium-scale business is a productive

economic business that stands alone, carried

out by an individual or business entity that is

not a subsidiary or branch of a company that is

owned, controlled, or becomes a direct or

indirect part of a small business or large

business with a net worth or the proceeds

yearly as provided for in Law.

2.3 SMEs Criteria

Criteria for SMEs can be grouped based on the

number of assets and turnover owned by business

entities as stipulated in Law Number 20 of 2008

concerning SMESs.

Table 2.

No DESCRIPTION ASSET OMZET

1 Micro business Maximum

IDR 50

million

Maximum

IDR 300

million

2 Small business > IDR 50

million -

500 million

> IDR 300

million -

2.5 billion

3 Medium

Business

> IDR 500

million - <1

illion

> Rp 2.5

billion -

50 billion

Source : Law Number 20 Year 2008

In a business perspective, SMEs are classified

into four groups, namely:

1. Informal sector SMEs, for example street

vendors.

2. Micro SMEs are the SMEs with the ability of

nature peng e diligently but lack the

entrepreneurial spirit to develop their

business.

3. Dynamic Small Business is a group of SMEs

that are capable of entrepreneurship by

establishing cooperation (accepting sub-

contract work) and exports.

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4. Fast Moving Enterprise is a SMEs that has

capable entrepreneurship and is ready to

transform into a big business.

2.4 Characteristics and Characteristics

of SMEs

SMESs are not only different from aspects, turnover,

and number of workers. According to Saifuddin

Sarief as quoted by Ismet Abdullah (2004), the

characteristics of SMEs are explained as follows.

Micro business with characteristics as follows:

1. Has not done financial management /

recording, even if it is simple, or there are still

very few who are able to make a business

balance sheet.

2. Entrepreneurs or human resources have very

low average education, generally at

elementary school level, and do not yet have

an adequate entrepreneurial spirit.

3. In general, you don't / don't know banking, but

you are more familiar with loan sharks or

middlemen

4. Generally, do not have a business license or

other legality requirements, including NPWP.

5. Workers or employees generally have less

than 4 (four) people. Members of a particular

cooperative are usually micro-scale.

6. Business turnover ( turnover ) is generally fast.

M ampu absorb funds relati f large. In an

economic crisis situation, business activities

continue to run even able to develop because

the management costs are relatively low.

7. In general, micro business operators are

persistent, simple, and can receive guidance

(provided that it is done with the right

approach).

Small businesses with the following

characteristics:

1. In general, the bookkeeping / financial

management has been carried out. Although it

is still simple, the company's financials have

begun to be separated from family finances

and have made a business balance sheet.

2. The HR is more advanced with an average

high school education and has business

experience.

3. In general, already have a business license and

other legality requirements, including NPWP.

4. Most of them are already related to banking,

but have not been able to make business

planning, feasibility studies, and credit

proposals to banks, so they still need the

services of consultants / advisors.

5. Workers or employees owned between 5 and

19 people.

Medium-sized businesses have the following

characteristics:

1. Generally, has coined the management and

organization of a better, more organized, even

more modern, with a clear division of tasks

between finance, marketing and production.

2. Financial management has done with m

enerapkan premises accounting system n order

to facilitate auditing and assessment or

inspection, including those carried out by the

bank.

3. Has made arrangements or management and

become a member of a labor organization.

There is a Social Security and health

maintenance program.

4. Already have all the legality requirements,

including interruption permit (HO), business

permit, location permit, NPWP,

environmental management efforts, and

others.

5. Already often partnered and take advantage of

funding in the bank

The quality of HR increases with the use of

arjana as. manager.

2.5 Strategy and Competitiveness

According to the dictionary, the strategy is defined as

the science and art of using all the resources of the

nation to implement a certain wisdom in war and

peace. While some other notions of competitiveness,

namely:

1. According to the Council of Competitiveness

, Washington DC, in 2006, competitiveness is

the capacity of a nation to face the challenges

of international market competition and still

maintain or increase its real income.

2. According to the European Commission in

1999, competitiveness is defined as the ability

to produce goods and services that meet

international testing, while at the same time

maintaining high and sustainable income

levels, or the ability of regions to generate high

levels of income and employment

opportunities with remain open to external

competition.

Internal and External Strategic Management Model Approach to the Increase of SMEs Competitiveness: Case Study on New Village and

Dusun Tuntungan 1 District Deli Serdang Sumatera Utara

557

2.6 Strategy for Improving SME

Competitiveness

The problems of small and medium enterprises

(SMEs) in Indonesia are generally the same.

However, the determination of strategies to improve

competitiveness, still must examine SMEs in detail

and continuously in order to create a solution in

winning the existing competition.

In strategy management, environmental analysis

is an important element in the strategy management

process needed to assess and maintain the future of an

organization or company. Environmental analysis

provides an overview of the strengths and weaknesses

as well as opportunities and threats facing the

company both now and in the future. Broadly

speaking, the company's environmental analysis

consists of an analysis of the external and internal

environment.

Analysis of the external environment is an

identification of factors that are expected to influence

company control, both opportunities that may be

exploited or will be faced by the company. Y ang

included in the external environment are political

factors, economic factors, social and cultural factors,

and technological factors. Economic factors relating

to the circumstances of the economic system temp at

a company operates is often a consideration in

decision-making by the management efforts on

company missal of per capita income and economic

policy of the government.

Political factors can be said as an important root

in the environment. Political conditions can affect

security and economic stability.

2.7 Application of ETAP-based

Accounting

The Indonesian Institute of Accountants has issued

Financial Accounting Standards for Entities without

Public Accountability (SAK-ETAP) which can be

applied to the preparation of financial statements

beginning on or after January 1, 2010. Some matters

of SAK ETAP provide a lot of convenience for

companies compared to PSAK with the provisions of

the reporting more complex. The visible difference

can be seen from the thickness of SAK-ETAP which

is only about one hundred pages and presents 30

chapters.

In accordance with the scope of SAK-ETAP, this

Standard is intended to be used by entities without

public accountability. Entities without public

accountability in question are entities that do not have

significant public accountability and issue financial

statements for general purposes (general purpose

financial statements) for external users. Examples of

external users are owners who are not directly

involved in business management, creditors, and

credit rating agencies. The background to the

preparation and issuance of SAK-ETAP is to provide

convenience for small and medium scale entities.

That IFRS-based SAK (General SAK) is intended for

entities that have significant public responsibility and

entities that carry out cross-border activities. These

general SAKs are complicated to understand and

apply to most business entities in Indonesia that are

small and medium scale. SAK ETAP provides many

conveniences for an entity compared to General SAK

with more complex reporting provisions.

2.8 Financial Statements

PSAK No. 1 (2012) states that the purpose of

financial statements for general purposes is to provide

information about the company's financial position,

performance, and cash flow which is beneficial for

most users of the report in making economic

decisions and showing management accountability

(stewardship) for management users of the resources

entrusted to them. The financial statements are made

as a means of management accountability to the

owner of the company presenting financial statements

according to PSAK No.1 (2012), namely 1) financial

position reports, 2) Comprehensive Income

Statements, 3) Equity Change Reports, 4) Cash Flow

Reports, 5) Notes n Top Financial Statements.

Quality characteristics are a measure to assess

whether or not a financial statement. IAI (2012) states

that the quality of financial statements must have

aspects that can be understood, relevant, reliability,

and comparable.

2.9 Conceptual Framework

Figure 1.

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3 LITERATURE REVIEW

3.1 Research Design and Data Source

The stage of research:

Figure 2.

4 DISCUSSION

4.1 SMEs Business Opportunities

The important role of SMEs is not only significant for

growth in big cities but also for economic growth in

rural areas. Here are some of the important roles of

SMEs:

1. SMEs play a role in providing broad economic

services to the community, the process of

equity and increasing community income,

encouraging economic growth, and realizing

national stability. The monetary crisis of 1998

-> 2008-2009 crisis 9 -> 96% of SMEs still

survived the crisis shock.

2. SMEs greatly assist the state / government in

terms of creating new jobs and through SMEs

there are also many new work units created

that use new workers that can support

household income.

3. SMEs have high flexibility when compared to

businesses with larger capacities, so SMEs

need special attention supported by accurate

information, so that targeted business links

occur between small and medium business

actors with business competitiveness

elements, namely the market network.

4. SMEs in Indonesia are often associated with

domestic economic and social problems such

as high levels of poverty, unequal distribution

of income, uneven development processes

between urban and rural areas, and problems

of urbanization.

5. The development of SMEs is expected to be

able to make a significant positive

contribution to efforts to overcome the

problems mentioned above. In addition, a

number of positive SMEs contributions that

cannot be underestimated are:

 The backbone of the national economy

because it is the dominant population of

business actors (99.9%);

 Produce GDP of 59.08% ( Rp4,899.57

Trillion), with a growth rate of 6.4% per

year;

 Contributing to the export volume reached

14.06% (Rp166.63 trillion) of the total

national exports;

 National Gross Fixed Capital Formation

(PMTB) of 52.33% (Rp830.9 trillion);

 Geographically spread throughout the

country, in all sectors. Providing basic

services that are needed by the community.

The multiplier effect is high. It is an

instrument of income distribution and

reduces inequality in people's welfare;

 A container for the creation of new

entrepreneurs;

 Minimal dependence on imported

components. Utilizing raw materials and

local resources that are easily found and

available in the vicinity thus saving foreign

exchange

This study aims to understand the problems faced

by SMEs through literature studies with the aim of

preparing concrete steps to resolve the issue.

Including the formation of business groups, the

strengthening of cooperation with a network of

business groups, improved knowledge and skills of

human resources, training, accounting, strengthening

distribution channels and strengthen the venture

capital through the s tem savings and loan. Kuncoro

(2008) in Bisnis Indonesia Daily, stated that there are

4 advantages of SMEs so that they can withstand

economic crises and still exist, namely:

1. This business does not use foreign debt, unlike

large corporations in general.

2. Do not have too much debt to the bank, because it

is considered unbankable.

3. Almost all inputs used in the process use

Indonesian local products.

The base of export orientation is quite good and

promising.

Strength is an internal strategic factor that must be

utilized for the development of SMEs in order to be

Internal and External Strategic Management Model Approach to the Increase of SMEs Competitiveness: Case Study on New Village and

Dusun Tuntungan 1 District Deli Serdang Sumatera Utara

559

able to compete against competitors. The intended

internal factors are:

1. Factor owner's strong commitment to the

company in the development of SMEs

2. Factor of the product possessed a specific and

k onsisten maintaining product quality.

3. HR competency factors because HR

competencies have a role in the development

of SMEs

4. Factor increase Kualitas and competitiveness

of SMEs through brand and packaging

attractive products.

5. Factor level of employee loyalty to the

company.

6. Accounting / financial recording system

4.2 Strategic Environmental Aspects

Table 3.

Political

Aspects

Economic

aspects

Social aspects

The rapid

economic

cooperation

between

countries,

especially in the

context of

ASEAN and

APEC which

will create new

opportunities

for SMESs

SMEs

contribution to

GDP formation

The

development of

SMEs only

requires a lower

level of

investment

SMEs

contribution in

non oil and gas

exports

The SMEs

sector has

guaranteed

labor market

stability

The emphasis of

unemployment

becomes a

vehicle for the

rise of new

entrepreneurs

Source: Strategic Plan of the Ministry of

Cooperatives and SMEs 2012

Thus, the SMEs business has a strategic role in the

Indonesian economy, because: Its position as a major

player in economic activities in various sectors; The

largest provider of employment; An important player

in the development of local economic activities and

community empowerment; Creator of new markets

and sources of innovation; Its contribution in

maintaining the balance of payments through export

activities .

4.3 SMEs Business Management

through Strengthening Internal and

External Factors to Increase

Competitiveness

SMEs are generally based on local economic

resources and are not dependent on imports, and the

results are capable of being exported. Thus, the

development of SMEs is expected to increase

macroeconomic stability, because it uses local raw

materials and has export potential, so that it will help

stabilize the rupiah exchange rate and inflation rate.

The development of SMEs will drive the real sector,

because SMEs generally have quite high industrial

links. Because of its uniqueness, the development of

SMEs is believed to strengthen the foundations of the

national economy. Indonesia will have strong

fundamentals if SMEs have become the main actors

who are productive and competitive in the national

economy. For this reason, the development of

cooperatives and SMEs must be a top priority for

national economic development in the long run.

Business management is the process of managing

existing resources to achieve goals, usually including

planning, organizing, taking action and monitoring

activities. Furthermore, the managed objects are as

follows:

1. Market and marketing. Current companies can

meet the needs and desires of customers.

2. Production. Produce good products , which are

easier and cheaper.

3. Human Resources. Every person involved

(internal or external) can provide benefits to

the organization.

4. Finance. The company knows its profit or loss,

and its wealth.

5. Creativity. Thinking something new ( thinking

new things ).

6. Innovation. By doing something new ( doing

new things ).

7. Mobilize resources and dynamize processes,

so that they become more efficient, more

effective, more productive and more

profitable, as well as providing more business

success.

Thus, to be able to develop SMEs business

business activities, efforts need to be made such as:

1. Easy access to capital.

2. Help infrastructure.

3. Business scale development.

4. Business network development , marketing

and partnerships.

5. Human Resource Development.

6. Improved technology access.

7. Creating a more conducive business climate

5 CONCLUSIONS

The factors that make up the IFE matrix are internal

factors consisting of strengths and weaknesses. The

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strength factor in competitive SMEs in Desa Baru and

Dusun Tuntung, Deli Serdang Regency, consists of:

1. Diversity of food SMEs products

2. Strategic Location

The location of the place to sell the mpek

is decisive in increasing competitiveness for

the development of food SMEs in the Desa

Baru and Dusun Tuntung, Deli Serdang

Regency , because the main condition in a

location is accessibility, namely the level of

ease in reaching and heading for a location that

is in terms of surrounding locations (Tarigan,

2006).

3. Quality Raw Materials

Raw materials with good quality are one of

the requirements to produce good, and vice

versa if the quality of raw materials is poor

will produce poor products (Holidin 2011).

The weakness : .

1. Not having its own packaging or label and the

lack of product promotion activities.

2. HR knowledge is still low

According to Munandar (2008), the

process of forming organizational behavior

starts from the formation of individual

behavior, then individual behavior forms

group behavior that describes organizational

behavior.

3. There is no contract with the supplier

4. The technology used is still simple

5. Access to banking is still low

According to Ervia et al. (2015) SMEs

have several challenges such as limited access

to capital, raw materials, information

technology and human resources

6. The absence of a good financial accounting

file.

The absence / absence of financial reports

at the SMEs of Desa Baru and Dusun Tuntung

Deli Serdang Regency , have not been able to

compile financial reports based on accounting

standards applicable to SMEs. This is seen

from the evidence of recording that is done,

namely only recording the entry and exit of

cash, and does not record all assets owned.

Such a situation results in SMESs not being

able to know all kinds of activities that can

affect the reduced and increasing value of an

asset owned, the amount of liabilities to be

paid and the total capital owned.

6 SUGGESTION

1. It is expected that SMEs in Baru Village and

Tuntung Village , Deli Serdang Regency,

North Sumatra will prepare financial reports

based on applicable regulations, namely using

SAK ETAP. It is intended that SMESs in Baru

Village and Tuntung Village, Deli Serdang

Regency , North Sumatra are able to find out

complete information about all assets owned.

In addition, by compiling financial statements

based on SAK ETAP in the future.

2. SMEs in the New Village and Hamlet

Tuntungan Deli Serdang North Sumatra

should archive all evidence of transactions and

recording routine, it aims to facilitate the turtle

sunan reports finances.

3. It is necessary to recruit competent human

resources in the field of accounting to help

prepare financial reports and include regular

bookkeeping training .

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