BUS 384 - Business Operations and Planning
Assignment 2024
Business Development Strategy at CV Anglur Selur
Introduction:
Small Micro and Medium Enterprises (MSMEs) are business activities that are able
to expand employment and provide broad economic services to the community, play a role
in the process of equalizing and increasing people's income, encouraging economic growth,
and realizing national economic stability (Kristiyanti 2012). In addition, MSMEs also have
a strategic role in national economic growth as evidenced by the resilience of MSMEs to
the economic crisis in 1998, thus the need for special attention from both the government
and the community regarding their management and development.
The development of SMEs in Indonesia is one of the priorities in national economic
development, in this case it is necessary to develop SMEs at the regional level. Central Java
is one of the regions with the highest growth of SMEs, namely 15% in 2020 with a total of
4 million of which 3.7 million are SMEs in the micro sector (Office of Cooperatives and
SMEs Central Java 2020). In developing SMEs, the local government together with the
Office of Cooperatives and SMEs carry out MSME assistance activities with the ultimate
goal of developing regional MSMEs, which from year to year have increased. A graph of
the development of the number of MSMEs assisted by Central Java MSMEs is presented
in Figure.
Pekalongan City is one of the cities in Central Java with a fairly developed trade,
especially with its nickname as the city of batik, the batik trade is growing rapidly in this
city, not only that, the trade in goods (retail), and the culinary trade have also boosted the
economy in Pekalongan City (Pekalongan City Investment and One-Stop Integrated
Services Office / DPMPTSP 2020). That way, the type of trade MSME business, especially
in the culinary sector, has the opportunity to be developed in the Central Java Region.
Culinary business is a business that is classified as not easy in processing its business
because it requires innovation and creativity in its development so that the right strategy is
needed. The strategy plays an important role in the sustainability of culinary SMEs.
One of the culinary delights of Pekalongan City is megono rice, which is a specialty
food favored by many Pekalongan residents. It is not difficult to find megono traders in
Pekalongan City because almost on every side of the road there are megono rice stalls, with
so many megono sellers, megono can be a trade asset of Pekalongan City. If megono can
be marketed more widely, it will certainly improve the economy of Pekalongan residents.
CV Anglur Selur is one of the MSMEs in Pekalongan City which has an innovation
in the form of canned megono, which is an innovation from Pekalongan City's specialty
food, megono. In the implementation of its business, CV Anglur Selur has encountered
various obstacles and problems that have become obstacles to development, but with the
efforts to innovate and solve these problems, it is an interesting thing to study, especially
in terms of strategy or how the business model of these MSMEs is implemented with
various business environment conditions that occur. This explanation is what The
researcher hopes to explore and analyze in depth the development strategy of canned
megono SMEs CV Anglur Selur Pekalongan using the Business Model Canvas and SWOT
Analysis.
Problem Formulation:
CV Anglur Selur is a family business with a license in the Indonesian Standard
Business Classification (KBLI) in 5 fields, namely: retail trade in processed meat and fish;
processing and preservation industry of canned fruits and vegetables; seasoning and
flavoring industry; retail trade in various kinds of goods, mainly food, beverages, or
tobacco not in supermarkets / minimarkets (traditional); processed food and cooking
industry. In this case they are still focusing on processing and preserving fruits and
vegetables in cans, with the product being canned megono which was able to attract the
attention of the Pekalongan City government in the Innovation and Creativity Exhibition
(PIK) at GOR Jatayu Pekalongan City held on Monday, September 9, 2019. This support
is a source of pride and motivation for CV Anglur Selur to continue developing its business.
The idea of this canned megono product has been initiated by the owner of CV Anglur
Selur but was only realized in 2019 due to licensing constraints and other technical
obstacles. Until 2020, the licensing issue has not been resolved due to the strict procedures
for obtaining business legality in the field of food canning such as BPOM licensing,
nutritional information testing, product durability testing, etc.
According to Widowati (2018) the shift in the lifestyle of traditional society to the
lifestyle of modern society, encourages people to prefer ready-to-eat and ready-to-eat food
or ready to eat while still considering the importance of health, so that the need for food /
beverage products is expected to be able to function to maintain health and fitness, safe to
consume and practical in its presentation, then traditional culinary food with retort pouch
technology or canning becomes an alternative packaging because it has the advantage of
being easy to carry because it is light, easy to open, and can be recycled and cheaper. By
looking at the lifestyle of modern society today, canned megono has a high potential value
to be developed and expand marketing. This instant lifestyle also affects CV Anglur Selur
in developing its business to be able to fulfill market desires.
Then in carrying out the canning process, CV Anglur Selur does not do it itself but
cooperates with PT Citra Buana Sentosa with an agreement of one thousand cans for each
canning process, this makes the sales turnover fixed every year because there is no increase
in production carried out considering the current business conditions of CV Anglur Selur
where the scope of marketing is still narrow so that it makes stagnant income and the
business has not developed optimally as explained in interviews with internal company
parties.
In addition, the application of inappropriate business models in MSMEs can be a
problem in itself as Saeputra (2016) explains that Business model is one of the main factors
that can affect the performance of a business and is the key to a business in increasing
competitiveness and achieving its goals, a business model is a model that is able to provide
an explanation of how a business gets or achieves profit and knows who the business
customers are. According to Osterwalder and Pigneur (2016), one of the most effective
tools used to assess a business model is the Business Model Canvas because it is able to
contribute to the use of business models in a business. Business Model Canvas focuses on
ideas to create value in a business. In addition, Business Model Canvas is applied because
the method is comprehensive, simple, dynamic, flexible, and visual so that it can be easily
understood and applied. Then there is a special reason for the application of the Business
Model Canvas at CV Anglur Selur, namely to facilitate understanding and application of
improvements to business people with education outside of business. The Business Model
Canvas approach is used to identify the current condition of the company, to then analyze
the strengths, weaknesses, opportunities, and threats that can affect the business model that
the company currently has. After analyzing the strengths, weaknesses, opportunities, and
threats, alternative strategies for improving the business model of CV Anglur Selur can be
formulated that can be implemented in the future.
Based on the facts that have been described, the problem formulation in this study is:
1. How is the business mapping of canned Megono CV. Anglur Selur in
Business Model Canvas?
2. What are the strengths, weaknesses, opportunities, and threats of each
element of the Business Model Canvas of CV. Anglur Selur's canned
Megono business?
3. What are the alternative business development strategies for canned
Megono CV. Anglur Selur with the Business Model Canvas approach?
Business Model Evaluation:
The stages of business model evaluation in Business Model Canvas analysis vary.
Among them, there are studies that use SWOT analysis as a business evaluation stage. This
was applied in Boedianto and Harjanti's (2015) research on development strategies with
the Business Model Canvas approach. Researchers provide an overview of the existing
business model based on the nine elements of the Business Model Canvas, then evaluate
the business model through SWOT analysis on each element of the Business Model
Canvas. The results of the SWOT analysis are in the form of strategies that can improve
the existing business model so that the integrity of the new model is formed. The use of
SWOT in business model evaluation is also applied in Surjogondokusumo and Indriyani's
(2016) research. Researchers use the Business Model Canvas as a guide in determining the
business model that takes place in the company. After that, the business model is evaluated
using the SWOT method on the nine indicators of the company's Busines Model Canvas
so that an appropriate business model development strategy is arranged in the company.
Not only using SWOT analysis in evaluating business models, there are also other studies
that continue SWOT analysis to the blue ocean strategy stage.
In Priyono's (2015) research, after the initial business model is identified, the
business model evaluation is continued through SWOT analysis on each element of the
Business Model Canvas and the preparation of a four-step framework on the blue ocean
strategy, namely the Eliminate- Improve- Reduce-Create scheme. The evaluation stages
helped researchers to understand the influence that occurs between each of the related
elements in the Business Model Canvas. The results showed that the company's business
model requires several additional factors in each business model element in order to
develop and take the company towards a better future. Evaluation of Business Model
Canvas using SWOT can also be combined with the preparation of strategic architecture.
This is in accordance with Rifin, et al (2018) research on strategic architecture. The results
of this study explain the identification of the existing Business Model Canvas combined
with SWOT analysis and strategy resulting in an improved business model design and
strategic architecture as managerial implications. In addition to the use of SWOT analysis,
business model evaluation can also be done based on consumer perspectives, as applied in
Abdurrahman's (2015) research. In the study, the stages of business model analysis
consisted of initial model identification, problem testing, solution testing, and business
model verification. Problem testing aims to test the truth of the initial Business Model
Canvas regarding product problems. Meanwhile, solution testing is carried out to test the
solutions given to potential respondents to the problems experienced while consuming the
product. SWOT analysis is most often used by organizations in evaluating Business Model
Canvas. This is because according to Osterwalder and Pigneur (2016), its use is quite
simple and when SWOT analysis is combined with Business Model Canvas, SWOT
analysis is able to focus on evaluating the business model and its nine elements.
Frame of Mind
Theoretical Framework:
The theoretical framework is used as a basic foundation in conducting research in
accordance with the objectives and direction of the research. The theory used is a theory
that relates to and explains the research problem to be carried out. It starts from the basics
such as the concept of strategy, business development to the analysis that will be used. The
theoretical research framework can be seen in the following description.
Business Model:
According to the PPM Management Team (2012), the definition of a business
model is a description of the relationship between the advantages and resources owned by
the company, as well as the activities carried out to acquire and create value that makes the
company able to generate profits. The concept of a business model is a very popular
concept and is widely used in describing or explaining the condition of the company. The
business model also has meaning as a description of the relationship between the
advantages and resources of the company. A business model describes thinking about how
organizations create, deliver, and capture value (Osterwalder and Pigneur 2016).
Business Development:
According to Umar (2003), the development strategy applied to each company is
different. It is influenced by internal and external factors that affect the business itself.
After knowing the key factors that become strengths, weaknesses, opportunities, and
threats for a business, then an analysis is carried out using the SWOT analysis tool to
formulate a strategy. The ability of a business to grow and develop differs from one
business to another. It is influenced by external conditions and internal capabilities.
External factors such as policy climate, working market structure, access to information
and services, and the type of commodities provided will determine how much potential a
business has to grow and develop. Internal factors such as marketing strategies, production
patterns, labor management, and entrepreneurship have more influence on the ability of the
enterprise itself.
Business Model Canvas (BMC):
According to Osterwalder and Pigneur (2016) the business model canvas is a
business model concept that is simple, relevant, and intuitively understandable without
leaving how a business functions. The business model is presented in a visual form to make
it easier to understand the overall scope of a business illustrated on a canvas that contains
nine key elements, namely, value propositions, customer segments, channels, customer
relationships, revenue streams, keywords, and customer relationships resources, key
activities, key partnerships, and cost structures. An illustration of BMC can be seen in
Figure.
1) Customer Segments
Customer segments explain the group of people that the company wants to reach so that
the business activities carried out are right on target and achieve the desired sales target.
Customers are at the core of all business models. Without customers who can provide
benefits, no company can survive for a long time. There are several types of customer
segments according to Osterwalder and Pigneur (2017), namely:
a. Mass Market: The business model focuses on one large group and does not
differentiate between different customer segments.
b. Niche Market : The business model has specific and specialized customer
segments. This business model is found in a supplier = buyer relationship.
c. Segmented: The business model differentiates market segments by their
respective needs and problems.
d. Diversified: The business model has two unrelated customer segments with
different needs and problems.
e. Many-Sided Platform: A business model has two or more interdependent
customer segments.
2) Value Propositions
Value propositions are a customer problem solver or to satisfy customer needs.
Value propositions are the unity of products and services that create benefits for specific
customer segments, Some value propositions are innovative and represent new offerings.
Propositions create value for customer segments through eleven different elements that
fulfill segment needs. The eleven segments are novelty, performance, customization,
getting the job done, design, brand/status, price, cost reduction, risk reduction, accessibility
and convenience/usability.
3) Channels
Channels are elements that describe how companies reach customer segments to
distribute the value propositions provided. Channels are the way companies carry out their
roles and meeting points with customers. The customer segments element has an important
role to be considered by a company or organization because it will determine the right
method of distributing value propositions to customer segments. Distribution is divided
into two types, namely direct and indirect channels.
The channel types and phases according to Oserwalder and Pigneur (2016) explain
that each channel can include some or even all five phases. The channel is a customer touch
point that plays a major role in every event experienced by them. The channel has several
functions, namely: Increase customer awareness of the company's products and services;
Help customers evaluate the company's value proposition; Enable customers to purchase
specific products and services; Deliver value propositions to customers; and Provide after-
sales support to customers.
4) Customer Relationships
Customer relationships are elements that describe the company's relationship with
customers with specific customer segments. The company's motivation in building
relationships with customers includes acquiring customers, retaining customers, and
increasing sales. According to Osterwalder and Pigneur (2017) customer relationships are
categorized as follows;
a. Personal Support
A relationship category based on human interaction. Customers can communicate
with the company through company representatives during the purchase process and after
the purchase is completed.
b. Specialized Personal Assistance
A relationship category similar to the personal assistance category, but this type of
relationship is deeper and more intensive and is usually developed over a long period of
time.
c. Self-service
The relationship category ensures that the company does not interact directly with
customers, but the company provides all the facilities needed by customers so that they can
be utilized directly by customers.
d. Automated Service
A category of relationships where the company does not have direct interaction
with the customer. This type of relationship mixes services this relationship is more
sophisticated with automated processes and is a type of self-service relationship.
e. Community
The relationship category is one of the company's tools in utilizing the community
to get closer to customers.
f. Cocreation
A category of relationships that many companies do with customers traditionally.
Companies engage customers to help and design and create value for their customers.
5) Revenue Streams:
Revenue streams explain how the company's revenue flows from each customer
segment. If customers are the core of a business model then revenue streams can be
categorized as its blood vessels. There are several ways to get revenue streams including
(Osterwalder and Pigneur 2017);
a. Asset Sales
The broadest common understanding of revenue streams comes from the sale of
physical products.
b. Usage Fee
Frequent use of services is one way to get revenue. The more often and more
customers use the product, the more revenue is obtained.
c. Subscription Fee
This acceptance is the use by providing services to customers for continued
purchases within a certain period.
d. Loan/Lease/Leasing
This revenue stream comes from granting customers the temporary exclusive right
to use the company's assets for a certain period of time. On the company's side, revenue
streams can be obtained repeatedly as long as the company's assets are utilized by the
customer.
e. License
This revenue stream is part of granting customers permission to use the company's
protected intellectual property.
f. Commission Fee
Revenue streams derived from mediation services between two or more parties. g.
Advertising Revenue streams in advertising are obtained from fees for advertising certain
products. In general, the media industry sector, event organizers, and including the software
sector utilize their revenue streams through advertising.
6) Key Resources:
Key resources describe the essential assets required for a company's business model
to function. Resources enable a company to create and offer value propositions, market
reach, customer relationships, and revenue streams. In general, key resources can be
physical, financial, intellectual, and human resources. According to Osterwalder and
Pigneur (2017), key resources can be categorized as follows;
a. Physical
A category of resources that includes various physical forms such as factory
facilities, buildings, vehicles, machinery, systems, sales systems, and distribution
networks.
b. Intellectuals
A category of resources that includes intellectual resources such as brands,
protected know-how, patents, and copyrights, partnerships and customer databases that are
one of the critical components in a good business model.
c. Human
A category that includes human resources and is a critical component of the
business model.
d. Financial
A category that includes financial resources such as cash credit, and other needs to
fulfill the company's resource requirements.
7) Key Activities:
Key activities describe what a company must do for the business model to work properly
so that it can operate. Elements that show that every company has key activities to create
value propositions, reach markets, maintain customer relationships, and earn revenue. Key
activities are categorized as follows (Osterwalder and Pigneur 2017);
a. Production
Key activities include designing, manufacturing, and delivering products in large
enough quantities or of superior quality. These activities dominate the business model of
manufacturing companies.
b. Problem Solving
A key activity that offers new solutions to solve problems to individual customers.
This activity requires continuous training due to the dynamic nature of problem solving
and good knowledge management.
c. Platform/Network
Key activities that are commonly found in business organizations are platform-
based. Internet networks, software/hardware, and brands can serve as platforms. These
activities aim at the delivery process and maintaining a good relationship with customers,
hence the need to continuously develop and maintain a customer-friendly platform. These
key activities are platform management, terms of service, and platform promotion.
8) Key Partnerships:
Key partnerships are the network elements of suppliers and partners that make the
business model work. The reason companies create and form alliances with partners is to
optimize the company's business model, and reduce risk. There are four types of
partnerships including (Osterwalder and Pigneur 2017);
a. Strategic alliances between non-competitors.
b. Coopetition: strategic partnerships between competitors.
c. Joint venture to create a new business.
d. Buyer - supplier relationship to ensure good quality supply.
In the theory of Osterwalder and Pigneur (2017) key partnerships have three motivations
in building key partners;
a. Optimization and Economies of Scale
One of the reasons for establishing a buyer - supplier relationship is to optimize the
allocation of resources and activities. This is done to reduce costs, engage in outsourcing
or shared infrastructure utilization.
b. Risk and Uncertainty Reduction
Motivation based on partnership can help reduce risk in a competitive environment
and the uncertainty of the business environment.
c. Acquisition of Resources and Certain Activities
Motivation that not all companies have. The company has the resources it needs.
One way to do this is to expand capabilities by relying on other companies to complete the
resources needed to carry out a particular activity.
9) Cost Structure:
The cost structure element describes all the cost components used by the company
or organization in ensuring the running of the business model. The cost structure describes
important sources of financing in various activities carried out by the company or
organization. There are two types of cost structure including (Osterwalder and Pigneur
2017);
a. Spurred - cost
The business model focuses on cost minimization which aims to create and
maintain a minimum cost structure, using low-priced value propositions, maximizing
automation and effective outsourcing.
b. Spurred - value
Some companies do not take cost into consideration, but rather focus on value
creation. This aims to provide premium value and high-quality services that characterize
value-driven business models. According to Osterwalder and Pigneur (2017), there are four
characteristics of the cost structure, namely;
1) Fixed Cost
Costs that will remain the same even if the volume of goods or services produced is
different.
2) Variable Cost
Costs that vary proportionally with the volume of goods or services produced.
3) Economies of scale
A cost advantage enjoyed when production is expanding.
4) Economic Scope
The cost advantage enjoyed is related to the larger operational scope.
Strengths, Weaknesses, Opportunities, and Threats (SWOT):
According to David (2017), SWOT is an analytical tool used to analyze the
environment in companies by identifying strengths, weaknesses, opportunities and threats.
SWOT analysis functions in matching important factors in the company's internal
environment and the company's external environment that will help companies develop
four types of strategies, namely S-O strategies (strengths-opportunities), W-O strategies
(weaknesses- opportunities), S-T strategies (strengths-threats), and W-T strategies
(weaknesses- threats).
Operational Framework:
CV Anglur Selur is one of the traditional food processing small businesses in the
form of cans that innovate to meet market needs. The determination of the development
strategy at CV Anglur Selur affects the competition and defense of the existence of its
business. One way for this business to survive and compete requires a good business model
that can reduce several factors that hinder the development of this business through the
application of several appropriate alternative strategies. In this study, a business model
analysis was carried out using the business model canvas approach.
Data collection method:
The collection of data and information aims to obtain an overview of matters
relating to the focus of the research. Data and information collection techniques in this
study were carried out using the following techniques.
Observation:
The observation technique is carried out through direct observation at the research
location to find out how the canned megono business process at CV. Anglur Selur.
Observations were made in the form of seeing how the conditions of the production
site are where the products are made as well as where the products are stored before being
distributed to customers and distribution partners.
Interview:
Interviews with respondents were conducted to obtain information about the focus
of the research through ideas, feelings and thoughts held by respondents in a semi-
structured manner. Semi-structured interviews were conducted with the help of question
guidelines and then supplemented with interviews conducted without using systematically
arranged question guidelines, but rather in the form of several questions regarding the
outline or focus of the question in accordance with the field of knowledge pursued by the
expert respondents. An unstructured interview approach was taken with expert
respondents.
Focus group discussion (FGD):
FGD is a focus group discussion conducted through group interviews to collect data
and information to solve certain problems. FGDs were conducted to map the business
model of canned megono business at CVAnglur Selur which had previously been identified
through observations and interviews. In addition, FGDs are also conducted to reach an
agreement in formulating a development strategy for canned megono business at
CVAnglur Selur which then the strategy is described through BMC improvements in
canned megono business at CVAnglur Selur. In this case, it will involve researchers and
business owners of canned megono at CVAnglur Selur as well as other parties involved in
the management of the business.
Literature study:
The literature used in this study comes from internal and external company data.
Internal literature in the form of business profiles owned by the company and external
literature comes from books, journals, and previous research related to the topic or research
method.
Data Analysis Method:
The data processing method carried out in this study uses qualitative descriptive
analysis. The descriptive analysis method is processed based on the nine elements of the
Business Model Canvas which is then carried out SWOT analysis on each element. Thus,
alternative business development strategies can be formulated and determined. Identifying
each element of the Business Model Canvas at CV Anglur Selur to find out the current
business model description. Based on the theory of Business Model Canvas Osterwalder
and Pigneur (2017), the following element identification consists of:
a. Customer Segments Elements that describe a group of people or organizations
reached by the company.
b. Value Propositions Elements that describe the value between the product and the
service will be created for a predetermined customer segment.
c. Channels Elements that describe how a company establishes communication
with its customers and reaches out to deliver a value proposition.
d. Customer Relationships Elements that describe the different types of
relationships that the company builds together with customers.
e. Revenue Streams An element that describes the company's revenue from each
of its customer segments.
f. Key Resources Elements that describe the company's critical assets in running
the business model.
g. Key Activities Elements that describe the company's key activities in executing
the business model.
h. Key Partnerships Elements that describe the company's network of suppliers and
business partners, so that the business model can work.
i. Cost Structure An element that describes the expenditure of all business costs in
operating the business model.
Then to conduct a more in-depth data analysis related to the nine elements above,
BMC indicators can be used so that they are more clearly specified as in table.
