Strategic management in the business of agricultural equipment and machinery services in Bandung, West Java

Abstract

The interest of young people to be a farmer is low. It could become a threat to the sustainability of agriculture in Indonesia. As an effort to prevent that conditions, The Ministry of the Agriculture Republic of Indonesia issued a policy on grant equipment and machinery for farmers. As a requirement, they must be incorporated in Agricultural Equipment and Machinery Services. It shows that Agricultural Equipment And Machinery Services is the spearhead in the successes of those programs. This study aims to measure the performance as a base to determine the strategies management on Agricultural Equipment And Machinery Services. The research analysis uses Structural Equation Modeling (SEM) to build mathematical models that show the relationship between variable research: economic (EKO), organizational (ORG), and technical (TKS). Mathematical model analysis on this research are TKS = 0.99*ORG (t-test: 4.96) and EKO = 0.61*TKS (t-test : 2.79). The goodness of fit test index shows that the model criteria are classified into moderate until a good fit. Therefore, the model can be used to rank each indicator’s influence. SWOT analysis results show that Agricultural Equipment and Machinery Services performance on quadrant three. The main strategies take advantage of the opportunity by optimizing strength. It can be concluded that the strategies are developing human capital, building a knowledge management system, and developing a website or android to expand disseminating business information.

Backward Regression

“…Based on Table 1, the second variable that should be enriched is TRAIN. Similar to the previous study, training is the best strategy to strengthen the human capital of farmers [7,8]. Farmers who desire to improve themselves should be encouraged to become trainers, operators, or managers.…”

“…The research questionnaire consisted of 19 questions based on a literature review from a relevant study [2,3,[5][6][7][8]. It aims to get comprehensive information regarding the relationship of organization, regular meetings, technic, and training to the economics of UPJA.…”

“…The previous study indicated that organization, meeting, technic, and training have a direct effect on business development [4][5][6][7][10][11][12]. Therefore, the research hypothesis of the study is following:…”

“…A lot of equipment and machinery was broken and abandoned. It is caused by several problems such as low business development ability, member age above 50 years, machinery equipment age above five years, training for operator and mechanic limited, no agricultural workshops, and the type no as needed [2,3,[6][7][8]. In summary, organizations face problems such as not producing highly competitive service to consumers, not building a solid capital network, and low managerial ability, moreover, due to the lack of support for capital, capacity building, institutional strengthening, regulatory arrangements, and support for agricultural infrastructure at the rural level [5][6][7]9].…”