Strategy to Improve Small Business Competencies and Capabilities in Global Market Competition (Indonesia Perspective)

Abstract

Globalization is a borderless world with “competition” as a key word. Globalization means opportunities as well as a source of threats. Specific advantages derived from operating in a global market seem to be exploitable only by large organization, unless small business can find the suitable strategy allowing them to cope with global market opportunities without suffering from limited competencies and capabilities. In globalization, there are high market and product competitiveness and also opportunity to grow for small business. Small Businesses should have a specific strategy that are implemented based on the entrepreneurs’ competencies, capabilities and products or service competitiveness strategies in order to compete in the global market. Small businesses in Indonesia suffer from some weaknesses:

(1) Internal factors as follows: weak in entrepreneurship spirit; Unprofessional employees; low in creative ideas and innovative products; weak in mental sustainability in competitive condition; limited business networking particularly in global market; unskilled and no experiences employee in global market practices; and less capital resources networking.

(2) External factors as follows: minimal conducive business environment; shortage in business training for small business actors by government; less government support such as business information center and infra structure for business transportation and communication facilities; limited marketing channel; and limited in global market information. The objective of this article is to provide recommendation in the form of strategy to improve the competencies and capabilities of small business actors (entrepreneurs and employees) in competition strategy in global market competition. Method used in this article is by literature review.

In order to survive and to take advantages of opportunities in the global market, the small business must improve their business competencies, capabilities and product competitiveness as well.

(1) Owners and Employees of small business should build the spirit of entrepreneurship and innovation by empowering their capacity building.

(2) The entrepreneurs should create relevant and competitive strategies in the market to become a driving force in order to improve their business competencies and capabilities in global market competition.

(3) The entrepreneurs should develop a center of alliances strategies for global market. Therefore, by improving the business competencies and capabilities then they will encourage the creation of product or service competitiveness in global market.

(4) The role of government with a conducive business environment created by government is considered as supporting factors to encourage the various efforts made by small business employees to improve their competitiveness locally and globally.

Keywords: small business strategy, competencies, capabilities, entrepreneurship, competitiveness strategy, small business