Development and Management of SME Industries in the City of Tanjungpinang

ABSTRACT

The rapid growth of one or several industries drives the expansion of other industries related to the sector that grew earlier.In the production sector, the inducement mechanism created as a result of the relationship between various industries in providing goods used as raw materials for other industries is divided into two types: backward linkage effect and forward linkage effect.The backward linkage effect refers to the level of stimulation created by the development of an industry on the progress of other industries.Meanwhile, the forward linkage effect is the level of stimulation generated by the first industry for their inputs.The presence of Small and Medium Enterprises (SME) in Indonesia remains resilient and continues to grow despite economic crises (Alyas & Rakib, 2017).SME can address unemployment issues and improve the welfare of the community (Sunariani, Suryadinatha, & Mahaputra, 2017).Additionally, SME can foster creativity in line with efforts to preserve and develop local traditions and culture (Anggraeni, Hardjanto, & Hayat, 2015).However, in practice, the development of SME has not progressed as expected.
The development of locally-based industries is part of local economic development.Although not a new concept, the idea of local economic development and its implementation techniques continue to evolve.Generally, regional or local economic development is an effort to strengthen the competitiveness of the local economy for regional economic development.The accumulation of these activities will significantly impact the development of the national economic competitiveness.Local Economic Development is fundamentally a process where actors within the community, including government, private sector, and the community, collaborate collectively to create conditions for economic development and growth for better generational outcomes (Ahmed et al., 2023;Fahlevi et al., 2023;Mushtaq et al., 2022).This process aims to create and develop a dynamic entrepreneurial culture, as well as community well-being and business, to improve the quality of life for all within the community (World Bank, 2011).SME plays a significant role in the economic development of a region, mainly because SME in Indonesia absorbs a considerable amount of resources that, if exploited proportionally, can provide a multiplier effect that drives significant regional development (Djakasaputra et al., 2021;Shah et al., 2023).The multiplier effect from the SME sector primarily comes from the large number of business units in the economic sector and its significant contribution to job creation and income sources. .

Problem Formulation
Based on the background issues above, the problem formulation in this research is as follows: 1.How to identify SME industry players in Tanjungpinang who have competitiveness when developed? 2. What are the problems faced by SME in globalization? 3. Formulating policy recommendations and strategies for the development of locally based SME in Tanjungpinang.

Expected Results
The expected results of the development and management of SME industries are:

Industry
The term "industry" originates from the Latin word "industria," meaning labor or workforce.The term is commonly used broadly to encompass all human activities aimed at fulfilling their needs for the purpose of achieving prosperity.According to Sukirno, the definition of industry is a company engaged in economic activities classified in the secondary sector.These activities include textile factories, assembly plants, and cigarette manufacturing plants.Industry is an economic activity that processes raw materials, raw goods, semi-finished goods, or finished goods to produce items with higher utility (Sadono Sukirno, 1995).In a narrow sense, industry is an economic activity that processes raw materials, raw goods, semi-finished goods, and finished goods into items with higher utility, including industrial design and engineering activities.In general, the concept of industry refers to an effort or activity that processes raw materials or semi-finished goods into finished goods with added value to generate profit (Habiburrahman et al., 2022;Prasetyo et al., 2022).Assembly, repair, and manufacturing are integral parts of the industry.The outcomes of the industry are not limited to goods but also include services.
Small and Medium Enterprises (SMEs) or Small and Medium Industries are terms referring to small businesses with a net worth of up to Rp 200,000,000, excluding land and building assets for business premises, and they operate independently.According to the Presidential Decree of the Republic of Indonesia No. 99 of 1998, small businesses are defined as: "Economic activities of the people that are small in scale, with the majority of them being small-scale businesses, and require protection to prevent unfair business competition".
Criteria for Small Businesses According to Law No. 9 of 1995: 1) Having a net worth of up to Rp. 200,000,000 (Two Hundred Million Rupiah), excluding land and building assets.2) Having annual sales of up to Rp. 1,000,000,000 (One Billion Rupiah).3) Owned by Indonesian citizens.4) Being an independent entity, not being a subsidiary or branch of a company that is not owned, controlled, or affiliated directly or indirectly with other Medium or Large Enterprises.5) Taking the form of an individual business, a business entity without legal status, or a business entity with legal status, including Small and Medium Enterprises abbreviated as IKM.It is part of a household business managed simply and still limited in its administration.Its employees are family members, involving relatives and neighbors, and its management is still regulated by one of its family members.

Strategy
According to David (2011), strategy is a collective means with long-term goals to be achieved.Business strategy encompasses

RESEARCH METHODOLOGY
geographical expansion, diversification, acquisitions, product development, market penetration, tightening, divestment, liquidation, and joint ventures or joint ventures.Strategy is a potential action that requires top management decisions and significant company resources.So, strategy is an action or activity undertaken by an individual or company to achieve predetermined goals or objectives.
According to Tjiptono (2006), the term "strategy" comes from the Greek language, namely "strategia," which means the art or science of becoming a general.According to Stoner, Freeman, and Gilbert Jr. (2005), the concept of strategy can be defined based on two different perspectives: (1) from the perspective of what an organization intends to do (intends to do), and (2) from the perspective of what the organization eventually does (eventually does).From these definitions, it can be concluded that the understanding of strategy involves the things that a company wants to do to achieve predetermined goals.a. Small and Medium Enterprises (SME) Development Strategy The strategies to be implemented in the effort to develop Small and Medium Enterprises (SME), according to Hetifah Sjaifudin as cited in Fanany (2008), are as follows: • Financial Capability Strategy, the development of various financial strengthening models for small and medium entrepreneurs has recently shown the increasing commitment of the government.Government efforts materialize through assisting the development of small and medium enterprises through temporary capital participation.
• Marketing Development, in the era of a borderless world where the domestic market is integrated with the international market, there are opportunities and challenges for small and medium enterprises.There are three marketing strategy approaches: improving the access of small and medium enterprises to the market, market protection, and shifting the structure of monopoly markets to competitive ones.
• Human Resources Development, improvement in the formal education system, enhancing the linkage between the education sector and the labor market through internship programs (link and match), and providing initiatives for the growth of research and development centers are expected to contribute to human resources and technology development.
The approach employed in the preparation of this document involves data collection in the field through both primary and secondary sources, utilizing interview methods, qualitative (yet measurable) methods, document studies, coordination meetings, and Focus Group Discussions (FGD).The operational framework of this study is as follows: Types of Data 1.Primary Data, Qualitative and quantitative data obtained directly from its source, namely industry players in Tanjungpinang City and stakeholders related to industrial development (for more details, refer to subsection 3.8).b) Mystery Client Technique, this technique involves the observer acting covertly so as not to disturb the natural setting of the studied community (Manzilati, 2017).
2. Secondary Data, obtained indirectly from the subject under study to address the research objectives.Qualitative and quantitative data obtained from research results or publications from relevant agencies or offices (OPD) aligned with the research objectives.

Data Collection Technique
This research will utilize several data collection techniques, including: 1. Observation The observation techniques used in this research are: a) Participatory Observation, the researcher needs to make an effort to be as close as possible to the informants.This means that the researcher must be 'accepted' and interact naturally for a continuous period (Manzilati, 2017).To avoid language, cultural, or interpretation issues due to cultural and language differences with informants, the research may involve trained local assistants.

Questionnaire
A questionnaire is a method in which researchers compile a list of written questions, which is then distributed to respondents to obtain data related to the research activities.The instrument used to collect data in this study is a questionnaire consisting of a list of written statements.Respondents are asked to answer or fill in several details related to their identity (gender, age, education, income, duration of being an industry player in Tanjungpinang City) and provide feedback on the issues they have faced based on their perceptions.The data collected includes both primary and secondary data.

In-Depth Interview
In-depth interviews will be conducted using a semi-structured interview technique, which includes main questions, additional questions, and investigative questions.This technique is employed to obtain data that may be challenging to acquire through questionnaires.According to Sarantakos, as cited in Manzilati (2017), interviews have specific characteristics: 1.Individual interviews, meaning one-on-one interviews.2. Flexible question structure, allowing the addition or reduction of questions as needed.3. Enables the researcher to ask questions in various ways and expressions while ensuring the achievement of the research objectives.4. Closed-ended interviews with Likert scale questions to obtain quantitative data.

Population
The population in this study consists of small and medium-sized .

Sample
The sample size will be determined using the Slovin Formula, commonly used in survey research.Given the large population size, this formula helps obtain a representative sample.The Slovin Formula is expressed as follows: Where : n = Sample Size N = Total Population e = Margin of Error

RESULTS AND DISCUSSION
Applying this formula to several populations, a sample of 20 SMEs and 7 Regional Government Agencies (OPD) throughout Tanjungpinang City will be selected.
SWOT Analysis SWOT stands for strengths, weaknesses, opportunities, and threats to a company's internal and external environment.SWOT analysis is a matching tool that helps managers develop effective strategies to maximize strengths and opportunities while minimizing weaknesses and threats (Rangkuti, 2009).Based on the field survey data, the values for the indicators of strengths, weaknesses, opportunities, and threats in the SME industry in Tanjungpinang City were determined.These values can be seen in the table below.To determine the priorities and the relationship between strategies based on the weighting of SWOT, an interaction of internal-external strategy combinations is conducted.The formulation of these strategies is based on internal factors, strengths and weaknesses, as well as external factors, opportunities, and threats, into the IFAS and EFAS SWOT interaction matrices.

CONCLUSION AND RECOMMENDATIONS
Then, based on the values of the IFAS and EFAS matrices, the S-O strategy has the highest value.The S-O strategy aims to drive growth (Rapid Growth Strategy) formulated based on the consideration that Tanjungpinang's local advantage-based SMEs will use their strengths to leverage existing business opportunities by increasing the organization's growth rate faster and improving quality, which is a strength factor to maximize the utilization of all opportunities.The S-O strategy can be translated as a strategy that uses strengths to leverage existing opportunities.This condition is advantageous for the development of local potential-based SMEs in Tanjungpinang because, from the internal factor perspective, its strengths are greater than its weaknesses.Meanwhile, from the external factor perspective, the existing opportunities are much greater than the threats.Therefore, the strategy applied in this condition is to support an aggressive/rapid growth policy (Rapid Growth Strategy).

Recommendations
As the central point of success for SME industrial businesses is Human Resources (entrepreneurs), continuous and sustainable mentoring is highly needed, starting from input processes to sales to consumers.Additionally, there is a need for improvement in SME products based on local potential with quality matching appropriate technology.The establishment of showrooms and workshops as product marketing centers in strategic and busy areas within the city or in districts/cities with high prospects is also necessary.

Conclusion
Based on the results of in-depth interviews with SME industry players, it can be concluded that most SME industrial businesses in culinary and craft products are still in the introduction stage.This is characterized by relatively low sales, limited production levels, relatively small competition, a relatively high failure rate, and the need for many modifications to products in testing and development.In the introduction stage of an industry, managerial skills are crucial to progress to the growth stage.SME entrepreneurs need to exert hard work and high patience so that the produced products are accepted by consumers consistently.Suitable strategies for this stage for SME entrepreneurs include rapid screening strategy, slow screening strategy, and rapid penetration strategy.