Received: June 12, 2021
Accepted: October 19, 2021
This study aims to analyze Recissbar's internal and external factors in order to define strategies to increase its competitiveness. Recissbar is a small business in Bandung (Indonesia) that sells traditional Indonesian foods that are very popular in the community. After collecting primary data (from an in-depth interview with the owner of the company), an External Factor Analysis Summary (EFAS) and an Internal Factor Analysis Summary (IFAS) were conducted. Once the company's strengths, weaknesses, opportunities, and threats were identified and a scoring system was established to separate the points that required attention, an analysis using a TOWS graph was performed to determine the most appropriate strategy to implement in the company. This study is descriptive in scope. According to the results and the scores assigned to the external and internal factors, an aggressive growth strategy was found to be the most appropriate. Moreover, the total score of the opportunity and threat factors was 2.5, which suggests that Recissbar responds to existing opportunities by avoiding threats in the same market and has the opportunity to continue to innovate. For its part, the total score of the strength and weakness factors was 2.6, which indicates that Recissbar has the strength of having a good reputation and delicious taste. In general, Recissbar could implement a growth-oriented strategy, particularly by promoting products on social media, cooperating with several mini markets, and doing business-to-business online sales.
Keywords: TOWS analysis, competitiveness, strategy.
JEL Classification: M21, O4.
Este estudio tiene como objetivo analizar los factores internos y externos en la empresa Recissbar con el fin de definir estrategias para aumentar su competitividad. Recissbar es una pequeña empresa ubicada en Bandung (Indonesia) que comercializa alimentos tradicionales de la cultura indonesia muy populares en la comunidad. Después de recopilar los datos primarios (a partir de una entrevista exhaustiva con el dueño de dicha empresa), se realizó un análisis de factores externos (EFAS por sus siglas en inglés) y de factores internos (IFAS por sus siglas en inglés). Una vez que se identificaron las fortalezas, debilidades, oportunidades y amenazas de la empresa y se estableció un sistema de calificación para separar aquellos ítems que requerían atención, se llevó a cabo un análisis mediante un gráfico DOFA para determinar la estrategia más adecuada a implementar en la empresa. Este estudio tiene un alcance descriptivo. De acuerdo con los resultados y los puntajes asignados a los factores externos e internos, una estrategia de crecimiento agresiva demostró ser la más adecuada. Además, el puntaje total de los factores de oportunidades y amenazas fue 2,5, lo que sugiere que Recissbar responde a las oportunidades existentes evitando las amenazas en el mismo mercado y tiene la posibilidad de continuar innovando. Por su parte, el puntaje total de los factores de fortalezas y debilidades fue de 2,6, lo que indica que Recissbar tiene la fortaleza de tener una buena reputación y un sabor delicioso en sus productos. En general, esta empresa podría implementar una estrategia orientada al crecimiento, particularmente promocionando sus productos en las redes sociales, cooperando con varios minimercados y realizando ventas B2B (de empresa a empresa) en línea.
Palabras clave: análisis DOFA, competitividad, estrategia.
Clasificación JEL: M21, O4.
Recissbar is an acronym for Rempeyek Cistik Barokah, a Bandung-based small business that was founded on April 4, 1998. It sells snacks, particularly cheese sticks and peanut brittle, which are indeed traditional Indonesian foods that are extremely popular in the community. Recissbar obtained a Halal permit with No. MUI.JB.NO.01101161120316 and a Home Industry Product License (P-IRT) with No. 2063273010070-21. These certifications helped it with its sales by removing any uncertainty about the characteristics of its products, which would eventually be consumed by the general public. Table 1 shows Recissbar's total revenue in 2016, 2017, and 2018.
Year | Revenue (IDR) | Percentage change |
2016 | 367,514,234 | |
2017 | 330,165,415 | 10.16% decrease |
2018 | 380,438,179 | 15.23% increase |
According to the data above, there was a fluctuation in terms of revenue, with a decrease of IDR 37,348,819 (10.16%) from 2016 to 2017 and an increase of IDR 50,272,764 (15.23%) from 2017 to 2018. One of the reasons for such an increase in revenue in 2018 was Recissbar's collaboration with Bandung’s hypermarket.
These revenue fluctuations have caught the attention of Recissbar's managers to such an extent that some of the company's shortcomings have been identified, including product unavailability in the nearest mini market, lack of promotion on social media, and lack of cooperation with supermarkets to sell its products. Such identification, however, has not been the result of any systematic process or business strategy that would have allowed the company to better understand the internal and external factors. Thus, this study aims to (1) analyze Recissbar's internal and external environments and (2) devise strategies to increase profitability.
Companies in a competitive business climate require careful planning (
According to
Economic issues of great relevance have been addressed through strategic management. One of these issues is the way traditionally successful organizations have developed capabilities that are difficult to replicate, in addition to technological and organizational resources that have allowed them to innovate (
There are several tools to identify management strategies (
In their study,
Furthermore,
For their part,
This study is qualitative in nature and descriptive in scope. According to
This research used primary data, which was collected through direct interviews with the owner of Recissbar and analyzed by means of a TOWS analysis. Before using the TOWS matrix, the company's internal and external factors were first evaluated. The internal business environment is a specific state that comes from within a company and can be analyzed to show a company's strengths and weaknesses. As noted by
According to
External environmental analysis is defined by
IFAS - EFAS | Strength (S) | Weakness (W) |
Opportunity (O) | SO strategy | WO strategy |
Create a strategy that uses strengths to take advantage of opportunities | Create a strategy that minimizes weaknesses to take advantage of opportunities | |
Threat (T) | ST strategy | WT strategy |
Create a strategy that uses strengths to overcome threats | Create a strategy that minimizes weaknesses to avoid threats |
The data collection process was carried out in two stages. First, the owner of Recissbar was asked to identify the company's strengths, weaknesses, opportunities, and threats. Then, he was asked to assign a score using the following criteria:
Internal Environment
According to the information provided by the owner of Recissbar, four internal elements were identified: reputation, technology, production capacity, and stretch opportunities.
The strengths and weaknesses were derived from the elements mentioned above. Such strengths and weaknesses, as well as their corresponding weights, are presented in Table 3.
Internal Strategy Factors | Weight | Rating | Value |
Strength (S) | |||
Good reputation | 0.15 | 4 | 0.6 |
Trusted because of the delicious taste | 0.15 | 4 | 0.6 |
Cheap prices | 0.15 | 3 | 0.45 |
Several flavors | 0.1 | 3 | 0.3 |
Subtotal | 0.55 | 1.95 | |
Weakness (W) | |||
Unable to get the product in mini markets | 0.15 | 1 | 0.15 |
No promotion on social media | 0.1 | 1 | 0.1 |
Lack of online sales management | 0.1 | 2 | 0.2 |
Not yet doing B2B online sales | 0.1 | 2 | 0.2 |
Subtotal | 0.45 | 0.65 | |
Total | 1 | 2.60 |
External Environment
Three external elements were identified: customers, competitors, and government regulations.
Table 4 lists the opportunities and threats that were identified from the analysis of the external factors mentioned above.
External Strategy Factors | Weight | Rating | Value |
Opportunity (O) | |||
Cooperation with mini markets | 0.15 | 4 | 0.6 |
Use of social media for product promotion | 0.15 | 3 | 0.45 |
Management quality improvement to manage online sales | 0.1 | 3 | 0.3 |
B2B online sales | 0.15 | 3 | 0.45 |
Subtotal | 0.55 | 1.8 | |
Threat (T) | |||
More famous competitor brands | 0.1 | 1 | 0.1 |
Has not yet mastered the local market | 0.1 | 1 | 0.1 |
Fewer consumers | 0.15 | 2 | 0.3 |
Easy-to-replicate taste | 0.1 | 2 | 0.2 |
Subtotal | 0.45 | 0.7 | |
Total | 1 | 2.5 |
As observed in Table 4, the Opportunity factor has a total score of 1.8 and the Threat factor has a total score of 0.7. According to Table 3, the Strength factor has a total score of 1.95 and the Weakness factor has a total score of 0.65. Opportunity-Threat (1.8 - 0.7 = 1.1) and Strength-Weakness (1.95 - 0.65 = 1.3). These results are depicted in the TOWS graph in Figure 1.
As evidenced in the TOWS graph, Recissbar is mainly aggressive. In this case, the company is in a favorable condition. By using its current strengths and opportunities, the company can employ an aggressive growth strategy (see Table 5).
Strengths | Weaknesses | |
IFAS/EFAS | S1: Good reputation | W1: Unable to get the product in mini markets |
S2: Trusted because of the delicious taste | W2: No promotion on social media | |
S3: Cheap prices | W3: Lack of online sales management | |
S4: Several flavors | W4: Not yet doing B2B online sales | |
Opportunities | SO | WO |
O1: Cooperation with mini markets | Its delicious tastes will open up opportunities for the company to reach new target markets. | Improve management quality to handle online market demand |
O2: Use of social media for product promotion | Cooperate with several mini markets | Promote products on social media |
O3: Management quality improvement to manage online sales | Promote online sales at several market places | Enhance management quality |
O4: B2B online sales | Create new flavors that are different from those of competitors | Do B2B online sales |
Threats | ST | WT |
T1: More famous competitor brands | Increase cooperation with several mini markets to dominate the local market | Develop management training programs to manage online markets |
T2: Has not yet mastered the local market | Increase promotion on social media so that products are better known | Do B2B and B2C online sales |
T3: Fewer consumers | Create a new product innovation | Do market expansion |
T4: Easy-to-replicate taste | Create new flavors that are difficult to replicate | Create new and different flavors |
The following are the various strategies that can be identified from the TOWS matrix presented in Table 5:
In their study,
Companies can market their products in a variety of ways. An aggressive growth strategy can start by promoting products on social media, cooperating with several mini markets, and doing B2B online sales. The results of this study are in line with those reported by
As observed in the EFAS matrix presented here, the total score of the opportunity and threat factors is 2.5, which suggests that Recissbar responds to existing opportunities by avoiding threats in the same market and has the opportunity to continue to innovate.
According to the IFAS matrix presented here, the total score of the strength and weakness factors is 2.6, which indicates that Recissbar has the strength of having a good reputation and delicious taste.
Based on the TOWS graph, Recissbar couldimplement a growth oriented-strategy, particularly by promoting products on social media, cooperating with several mini markets, and doing B2B online sales.
The author declares no conflicts of financial, professional, or personal interests that may inappropriately influence the results that were obtained or the interpretations that are proposed here.