DEVELOPMENT STRATEGY OF FOOTWEAR SMEs

Kabupaten Bogor is a city which potentialy produce footwear. Data from Bogor Regency Department of Industry and Trade of year 2011 shows that there are 4.178 enterprises units which accommodate 15.295 labors and it has currency gyrations Rp5 billion per day. Ciomas District is one of footwear Small and Medium Enterprises (SMEs atau UKM) centers located at Bogor Regency.The purposes of this study are: (1) Identify the footwear SMEs characteristics at Ciomas Bogor Regency; (2) Analyze the internal and external environment of the UKM at Ciomas Bogor Regency; (3) Arrange the UKM development strategy at Ciomas Bogor Regency.Purposive sampling is used for the determination of respondents. Data processing and analysis in this study conducted by descriptive, quantitative, and qualitative. Matrix Internal Factor Evaluation (IFE), External Factor Evaluation (EFE), position strategy, Strengths, weaknesses, Opportunities and Threats (SWOT), and Analitical Hierarchy Process (AHP) are used to analyze the quantitative data. IFE matrix score -0,30 and EFE matrix score 0,33. It means that strategic position of footwear SMEsCiomas at Kuadran III which we can say that footwear SMEs has big and vast opportunities but also it has weakness. The priorityalternative strategy for footwear SMEs development are: production increase, expand market shareand adopt advanced technology.


Small industry (IK) in
Indonesia is an important part of national economic system because it plays a role to accelerate the equalization of economic growth through mission of providing the field of business and employment, increasing household incomes and increasingthe foreign exchange earnings, and strengthening the structure of national industry (Hubeis, 1997).As an illustration, footwear industry is one of prospective industrial sectors for the growth of the Indonesian economy.This is because footwear has become one of the basic needs of each individual with large market segment, ranging from young children to adults in every stratum of society.The number of population which is always increasing and changes in people's lifestyles will lead to demand of footwear which is increasing as well (Department of Trade and Industry Bogor, 2011).
Bogor Regency is one of the potential areas producing footwear products.Data from the Department of Industry and Trade of the Bogor Regency in 2011, there were approximately 4.178 business units that employed about 15.295 workers with a turnover that goes to Bogor city reached 5 billions per day.One of micro, small, and medium footwear enterprise (SME-AK) which is a center of shoes/slippers manufacturer in Bogor is located in Ciomas Sub-District.The final report "Study of the Development of Regional Core Competence Bogor Regency" in 2007 said that the products of SMEs-AK Ciomas has the potential to be developed as an export commodity, but the continuance experienced major constraints, namely: (1) the lack of capital for the procurement of raw materials independently to freely determine its own market; (2) patterned craftsman make the order from the tauke/ bosses, which both capital and models have been established, making craftsmen make less innovation and enhancing their creativity in reading the market opportunity which is still very wide and open; (3) the model and design which is done is still monotonous because of craftsmen's position as followers and they are determined by the customers (tauke/ bosses) who are alsothe providers of raw materials; (4) the capital cannot be managed well because the payment received is in the form of cheque and it takes two months to be converted to raw materials and the output produced.Payment with voucher system that can only be used to buy raw materials in raw material store designated by tauke could potentially reduce the margin that should be accepted; (5) production process technology used is still simple.In connection with the various problems faced by the SME-AK, the strategy to overcome them is necessary.To develop this, not only imposed on the SMEs, but the support should be obtained from all stakeholders.The support is expected to come from the association of businessmen, university, office/agency in the government of regency/city and province.The Purpose of this study was to identify the characteristics of SMEs-AK in Ciomas Sub-District Bogor Regency, analyze the internal and external environmental condition of SMEs-AK in Ciomas Sub-District Bogor Regency, and formulate development strategies of SMEs-AKinCiomas Sub-District Bogor Regency.

RESEARCH METHOD
The research was conducted in three SMEs -AK villages which are located in Ciomas Sub-District, namelyParakan Village, Mekarjaya Village and Ciomas RahayuVillage.The location was chosen deliberately by considering thatParakan Village and Mekarjaya Village are two villages which have the highest number of business units, while Ciomas Rahayu village is a village which has business units which are already independent.The primary data were obtained through field surveys and interviews.The interviews were conducted in a structured way with questionnaires as the instrument.The selection of respondents was conducted by purposive sampling, determining respondents deliberatelybased on specified criteria.A person can be said to be an expert if he/she is capable of carrying out something with the required knowledge, namely in the form of the ability to collect data and complex information, as well as the ability to interpret the data as a planned activity such as decision-making process (Han and Kim, 1989).The secondary data is in the form of documentation.According toArikunto ( 2006), documentation is finding and collecting data about things in the form of notes, transcription, book, newspaper, magazine, minutes of meeting, report and so forth.Data processing and data analysis was done descriptively, quantitatively and qualitatively.The method which was used in data processing is IFE matrix, EFE matrix, strategic positioning matrix, and SWOT matrix, as well as AHP method.

General Overview of Condition of SME-AK
The capital system which is mostly implemented in SME-AK in Ciomassubdistrictis voucher system, which is the system of production cooperation between the footwear businessman as the manufacturer and the party who gives order (Wholesale) as consumer.The salary system implemented is based on piecework system, where the workers are paid based on the number of shoes produced (per score of shoes).The salaries of workers are vary based on the level of difficulty of shoes they make.Most SMEs-AK businessmen in CiomasSubdistrict do not have clear a recording andaccounting system, so they do not really know whether they get profit or loss Most (92%) footwear businessmen in Ciomasare male and 48% of footwear businessmen in Ciomas graduates Elementary School/ MI.The majority of businessmenhave worked more than 10 years (52%).
There are also businessmen that have beenruning their business for more than 20 years, even for 30 years.However, the number of businessmen that have been working for 30 years is not many, as shown by thecharacteristics of legacy business which can be seen in this study.The type of business in footwear industry in Ciomas is includedin IK (43%).This is consistent with the average number of workers owned by the business, around 5 workers, with working time around 8-12 hours per day.

The Relationship between Businessman's Characteristics and Business Characteristics
According to Indratno and Irwinsyah (2008), cross tabulation is a method that tabulates several different variables into a matrix which results are presented in a table with variables which are arranged in rows and columns.Based on the result of cross tabulation analysis, we can see the relationship between several factors of businessman's characteristics and the characteristics of SME-AK Ciomas.The education level of businessmen is related to the type of business and the acquisition of the average monthly income (million).The higher the education level of entrepreneurs, the biggertendency they have to develop their business.Most businessmen who do not finish theireducationdo their business in the category of household industry, while those who have higher education, who are graduates of Elementary School to University generallyin the category of small industry (Table 1), with larger number of workers than household industry.
Furthermore, the level of education also has a significant relationship with the income (million).For businessmen who do not finish school, their average monthly income (million) is less than 10 millions.For those whose last educationis elementary school and junior high school, they have higherincome (million), which canbe more than 10-30 million per month.While most businessmenwhose last education is senior high school or Universityhave higher income (million), which can be more than 30-60 million per month (Table 2).This means that the education level of businessmen have an important role in supporting the development of their businesses.
For businessmen whose ownership of capital is inadequate, most of them often feel like want to move from footwear business to another business.However, for those whose ownership of capital is the category of less to adequate, most of them rarely want to move from this business (Table 3).This means that the capital is one of factors related to the sustainability of small footwear business.
Businessmen whose incomeis less than 10 million per month can meet the needs of their families around 51-75%.While for the businessmenwho have average of income more than 10-30 million per month can meet the needs of their families in the range of 76-100% (Table 4).If the acquisition of the average monthly income (million) is getting bigger, then businessmen have a tendency to meet their family needs better.

Internal Environment
A series of internal activities carried out by SME-AK Ciomasincludes six activities.The first is Innovation Process.SMEs-AK Ciomasdo not fully make innovation, both in the process (production engineering and production technology), product, marketing, and the management.For production technology, they still use manual way with simple equipment.It inhibits the improvementof quality and production capacity.The second is Operational Process.The operational processes of SME-AK Ciomas consists of three activities, namely providing raw materials, producing and saling footwear products.The raw materials are provided by building partnership with the order giver for the procurement of raw materials and buying raw materials directly with their own capital.The production activity is carried out manually, without using sophisticated machinery.Production of footwear is not only based on orders, but businessmen also continuously produce footwear to be sold in several shoe shops.The production capacity ranges from 1500-2500 pairs of shoes per week.In sellingthe products, orders which have been produced by SME-AK will be immediately taken by the order giverto be resold to wholesalers or shops.The production wage of craftsmen will be given one to three months after the product is marketed, by taking into account the initial capital that has been taken through voucher.The third isProduct Warranty.This is a service provided by the manufacturer to the consumer after the product is purchased.SMEs-AK Ciomasdo not include the official guarantee in selling their products.However, if there is a return of severely damaged product, the damaged product will be repaired or replaced with the new one, if the raw material is still available.The fourth isHuman ResourceSkill.SME-AK Ciomas craftsmen are craftsmen who are capable of making footwear from generation to generation, so they master the techniques in producing footwear.However, sometimes there are still errors in the production process, which is caused by inaccuracy of the workers.The fifth isInformation Availability.SMEs-AKCiomas have not had a structured or computerized information system.The obstacle faced by SMEs-AK Ciomas is limited information on market and marketing.This is due to lack of socialization regarding training/counseling which becomes an obstacle in the process of growth and learning in SMEs-AK Ciomas.And the last is Organization Climate.Organizationclimate which is dominant in SMEs-AK Ciomas is their close family relationship between business owners and the workers because their organizational structure is simple.The owner also works as supervisor and other part is given to particular people in the family or workers who they trust.

External Environment
External Environment consists of far environment and industrial environment.Far environment has four factors.The first isPolitical Factors.Government regulation will affect the sustainability of the business in SMEs-AK Ciomas.One of the national policy is very influential in the business of craftsmen is the implementation of China-ASEAN Free Trade Area (CAFTA).Free trade makes imported products that have cheaper selling price highly potential to dominate the market, especially Chinese products.External Environment consists of far environment and industrial environment.Far environment has four factors.The second is Economic Factors.Unstable economic condition leads to the fluctuation of raw material price.This leads to high cost of production, which is not followed by an increase in selling price; therefore, it makesa decrease in amount of the profit of SME-AK Ciomas.The third isSocial Factors.One of social trends in society nowadays is following the fashion

Industrial Environment
Industrial environment has five factors.The first is Threat of Newcomers.The newcomers of an industry depend on the barriers in movingto the new industry.The barrierin mooving to footwear industry is relatively small, both from the scale of economic, capital, and regulation.The second is Suppliers' Bargaining Power.Supplier has the ability to raise prices or reduce the quality of raw materials.However, suppliers of raw material to SMEs-AK Ciomasare in many places, so that the bargaining position of the supplier is not too strong.The third is Buyers' Bargaining Power.Buyers have the ability to influence the seller to lower the price.However, SMEs-AK Ciomas do not sell their products directly to the final consumer, so that the final consumer does not have the bargaining power directly to the craftsmen.The fourth is Threat from Substitution Products or Substitution.Substitution product is a product that can be an alternative, because it provides the same function with a product, so that it can be a substitution of the product.But for footwear products, there are no other products that can provide the same function.The last is Competition of Companies in the Industry.The competition appearsbecause there are efforts to maintainthe order givers and attract other givers.In addition, there is competition with other companies from otherregion that produce similar products, in which the image of their products are well known by the public, such as the footwear industry from Cibaduyut.

Identification of IFE Matrix of SMEs-AK Ciomas
Internal factors of strengths and weaknesses of SME-AK Ciomasare presented in IFE matrix.The scores obtained in IFE matrix show how SME-AK Ciomas usetheir strengths to overcome their weaknesses.The analysis result of IFE matrixis shown in Table 5.

Identification of EFE Matrix of SMEs-AK Ciomas
Factors of opportunity and threat of SMEs-AK Ciomas are presented in EFE matrix.The scores obtained from EFE matrix shows the ability of SMEs to take advantage of opportunities in order to address the threat owned.The analysis results of EFE matrix can be seen in Table 6.

Formulation of SWOT Matrix of SME-AK Ciomas
The development strategy in SWOT matrix of SME-AK Ciomas is adjusted based on IFE and EFE matrix, in which the strategic position is in quadrant III that supports the turn around strategy.The result of SWOT analysis of SME-AK Ciomas can be seen in Table 7.

Strategic Position of Development Plan of SMEs-AK Ciomas
Marimin ( 2004) argues that by knowing the position of the company in the right quadrant, then the company can make decisions more appropriately.Based on the evaluation of internal and external factors,total score of IFE matrix obtained was -0.30 and the total score of matrix EFE was 0.33.The strategic position of development plan of SMEs-AK Ciomas is supporting turn around strategy in quadrant III, which means that SMEs have a great opportunity.On the other hand, they have weaknesses that need to be minimized.Strategic position of SME development plan can be seen in Figure 1.
Based on Figure 1, the development strategy of SMEs-AKfocuses in minimizing the weaknesses that exist to achieve the opportunities that are already owned.

SO Strategy (Strenghts-Opportunities)
This strategy is expected to increase the income of SMEs and reduce the flow of funds on several aspects, e.g. in terms of marketing, innovation of products that provide value-added of products and increase the selling price.

WO Strategy (Weaknesses-Opportunities)
This strategy is an intensive strategy that combines market penetration, market development, and product development strategies all at once.SME-AK Ciomas needs to establish the cooperation with the government and/or other related institution in terms of guidance on capital, marketing, managerial, and modernization of production equipment.The government has the ability to provide selective capital, helps marketing and promotional practices, providing modern production equipment, helping Research and Development (R & D) activity, as well as providing training/counseling program of business.It can raise the knowledge and managerial skills of craftsmen and also encourage them to be more independent.One of the disadvantages of SMEs is the lack of capital, to resolve this problem, they can cooperate with banks or other financial institutions, with sufficient capital to help SMEs to develop their business

ST Strategy (Strenghts-Threaths)
Cooperate with fellow craftsmen to create the special characteristics of products and services as well as maintaining the quality of their products to anticipate the competition

WT Strategy (Weaknesses-Threaths)
Creating good image of the product in order to expand business and increase product sales and maintain customers.

Development Strategy of SMEs-AK Ciomas
The contribution of SMEs to national economy makes the importance of formulation of strategy and the development program of SMEs as a means of society empowerment.Therefore, the identification of factors that influence the success of SME development is required to be done.Those factors are obtained from primary and secondary data, as well as interviews with the respondents.Furthermore, the priority selection of SME development strategy was done by using AHP.
There are five dominant factors that can affect the success of SME-AK development in Ciomas Subdistrict that are government policy, technology skill, the experience and business managerial skill, the expertise and skills of the workers, and access to capital and marketing.

The Selection of Actors Who Gives Biggest Contribution to the Development of SMEs
There are four dominant actors who can influence the success of SME-AK development in Ciomas Subdistrict (Table 9).
This shows that the role of local government occupies the highest position, given thatthe role of governement is as the regulators who have authorities to develop policies for businessmen, which is aimed at stimulating the business and prevent the market structure that can conduct unfair competition between large, medium and small businesses in the region.

Selection of The SME Development Objectives
Formulation of objectives is very important to drive business development strategies, following the dynamics of the changes that occur.Moreover, it can see the opportunities which can be utilized in determining the priorities that are focussed on the development strategic direction.There are four purposes of development that are to create a conducive climatefor the growth and development of SMEs, to create SMEs into efficient, healthy business, and business which has high growth, so it can become socio economic power and affect the development of national economy, to encourage SMEs to give a maximum role in employment and income resource, and to create forms of cooperation to strengthen the position of SMEs in competition at the national and international levels.

Formulation of Alternative Strategies for the Development of SMEs
Prioritization of alternative strategic was conducted through the opinions of expert respondent, then the results are processed by using AHP analysis technique.Based on the hierarchical structure is the level of importance is determined between one variable with another variable based on the principle of pairwise comparisons.Determination of the level importance or weighting was done by the expert respondents subjectively and intuitively.Preparation of a hierarchical structure was based on the development of SME-AK based on the relationship of elements that become the part of the scope of the problem was the first thing to do.Hierarchical structure which are arranged consists of five levels, 0,42 1 To create forms of cooperation to strengthen the position of SMEs in competition at the national and international levels.

0,35 2
To create SMEs into efficient, healthy business, and business which has high growth, so it can become socio economic power and affect the development of national economy.

0,12 3
To encourage SMEs to give a maximum role in employment and income resource.

CONCLUSION
Characteristics of SME-AK in Ciomassubdistrict, Bogor Regency is the most of businessmen are male, they still perform traditional management, perform administration system with simple recording, market for local and regional sales, using local raw materials, implement a system of continuous production, the source capital mostly from voucher system, use simple technology and equipment, and do not have the ability to innovate well.Based on the evaluation of internal and external factors with IFE matrix and EFE matrix, the strategic position of development plan of SMEs-AK Ciomas is obtained by supporting turn around strategy.Alternative strategies which become main priority for the development of SME-AK Ciomas is improving production and expanding market share by utilizing technology advances.

Figure 1 .
Figure 1.Strategic Position of Development Plan of SMEs-AK Ciomas , factors, actors, the purpose of development and alternative strategy policies, as presented in Figure2.

Figure 2 .
Figure 2. AHP Hierarchical Structure for The Development of SMEs-AK Ciomas

Table 1 . Cross Tabulation of Education Level and Business Type
Source: processed data,

Table 10 . Purposes of SMEs Development Purposes Weight Priority To
create a conducive climate for the growth and development of SMEs.