Competitive Strategy of Local Beverage Companies in Preserve Their

Existence to Face of Competition with Imported Drinks

Faisal Eriza and Nicholas Marpaung

Study Program of Business Administration, Jl. Dr. A. Sofian No.1A, Padang Bulan, Medan, Indonesia

Keywords: Corporate Strategy, Strategic Management, Strategy, Existence, SWOT Analysis.

Abstract: This study is determine what strategy are used by Siantar Ice Factory Ltd in preserve the existence of 'Cap

Badak' products; to know the strategy implementation, evaluation; and also its obstacles. After that, this study

analyzes the alternative strategy that possibly recommended to Siantar Ice Factory Ltd for supporting the

existing strategy. The research method used is descriptive-qualitative, using case study. Data were collected

by interviews, observation, and documentation. Data analysis techniques used were qualitative-descriptive

analysis of Miles and Huberman and also SWOT Analysis using SWOT Matrix, IFE Matrix, EFE Matrix, and

then matching the alternative strategies obtained on SWOT Diagram. The results showed that in maintaining

the existence of Cap Badak products, Siantar Ice Factory Ltd uses Defense Strategy. The strategy

implementation and evaluation has been done properly without changing any standards. The obstacles is they

still using their conventional machines because the owner does not intend to regenerate the machines, and the

production becomes less and hampered because many bottles are not returned to the factory yet. Furthermore,

based on IFE Matrix, EFE Matrix, and SWOT Diagram, the results showed that PT. Siantar Ice Factory is in

Quadrant I, where the company's position is very profitable and supports aggressive strategies. Based on

SWOT Matrix Analysis, Siantar Ice Factory Ltd is recommended to launch Cap Badak products in plastic

bottle packaging immediately, do promotion after regenerating machines, educate consumers about the

importance of returning bottles on time, purchase orders bottles more often, and change the family

management system into a more professional system.

1 INTRODUCTION

Siantar Ice Factory Ltd, previously named NV Ijs

Fabriek, is the oldest factory in Pematangsiantar city

and initially only produced ice bars. The founder was

Heinrich Surbeck, a Swiss chemical engineering

graduate who first came to the province of North

Sumatra in 1902. In the province of North Sumatra,

Surbeck established a gambier factory in Gunung

Melayu (Asahan), a power plant, hotel, ice factory

and beverages factory in Pematangsiantar city which

he named NV Ijs Fabriek.

In 1920, NV Ijs Fabriek developed its industry.

This factory not only produces ice bars, but has also

penetrated into beverage production. The beverage

products produced by NV Ijs Fabriek initially

consisted of eight soft drinks, namely Orange Pop,

Sarsaparilla, Raspberry, Pineapple (Pineapple),

Grape Fruit Soda, American Ice Cream Soda, Coffee

Bear, and Soda Water, with all drinks under the brand

name 'Badak'. '. Along with the times and the journey

of PT. Siantar Ice Factory, currently there are only

two flavors that can be found in the market, namely

Sarsaparilla and Soda Water. In addition, Siantar Ice

Factory Ltd. is still producing ice bars. The

development of NV Ijs Fabriek's beverage production

until it changed its name to PT. The Siantar Ice

Factory will be discussed in the next chapter. Over

time, Siantar Ice Factory Ltd has a subsidiary named

PT. Jasa Harapan Barat, which is in charge of

marketing the products of the Siantar Ice Factory Ltd

by distributing them to many cities, such as the cities

of Medan, Batam, Pematangsiantar, Tebing Tinggi,

Sidikalang, Sibolga, Jakarta, Baganbatu, Tarutung,

Tanjung Balai, Padangsidempuan, Rantau Prapat,

Aceh, Pekanbaru and Samosir.

Based on the description above, this study

examines the strategies used by Siantar Ice Factory

Ltd in maintaining the existence of Cap Badak

products since the Dutch colonial era until now and

then identifies and matches them according to the

concept of strategic management science, and

Eriza, F. and Marpaung, N.

Competitive Strategy of Local Beverage Companies in Preserve Their Existence to Face of Competition with Imported Drinks.

DOI: 10.5220/0011823200003460

In Proceedings of the 4th International Conference on Social and Political Development (ICOSOP 2022) - Human Security and Agile Government, pages 391-396

ISBN: 978-989-758-618-7; ISSN: 2975-8300

 2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)

391

formulates strategies with the aim of recommending

alternative strategies. / additions that can be applied

in developing a pre-existing strategy.

2 LITERATURE REVIEWS

2.1 Strategic Management

According to Fahmi (2017:2), strategic management

is a plan that is prepared and managed by taking into

account various sides with the aim that the influence

of the plan can have a positive impact on the

organization in the long term. One of the focuses of

the study in strategic management is to have an

impact on the application of strategic concepts to the

company in the long term or sustainably, including in

terms of stable profits. Stable profit is influenced by

sales stability which continues to experience constant

growth.

2.2 Concept and Definition of Strategy

According to Pardede (2011: 28), in a very general

sense, strategy can be interpreted as the best way to

achieve a goal or to complete a job. A more complete

understanding states that strategy is the determination

of long-term goals and objectives of the organization

or company, determining the number and types of

activities needed, and allocating resources to achieve

them.

2.2.1 Strategy Level

1. Corporate Strategy

According to Robbins and Coulter (2016: 253),

corporate strategy is an organizational strategy that

specifies what business to be in or to be in and what

the company wants to do with this business. The three

main types of corporate strategy are growth, stability,

and renewal.

2. Business Strategy (Competitive Strategy)

According to Robbins and Coulter (2016: 255),

competitive strategy is a strategy about how an

organization will compete in its business. For small

organizations that are only involved in one line of

business or large organizations that have not been

diversified in various products or markets,

competitive strategy describes how the organization

will compete in its primary or primary market.

However, for organizations that work in multiple

businesses, each business has its own competitive

strategy that defines its competitive advantage, the

products or services it offers, the customers it wants

to reach, and the like.

3. Functional Strategy

According to Rangkuti (2015: 14) the formulated

strategy is more specific depending on the functional

management activities. If at the company level a

strategy has been set to create a new activity unit at

the business unit level, for example a purchasing unit,

the functional strategy drawn up refers to all

purchasing activities, such as making a standard

pricing strategy based on a certain profit margin

percentage for each type of goods. bought. The

strategy for controlling the quality of purchased

goods can also be carried out or even submitted to

suppliers who have been selected strictly.

2.2.2 Alternative Strategy Formulation

In adding, developing or recommending additional

strategies for companies in improving existing

strategies in maintaining their existence, it is

necessary to formulate strategies. According to

Yunus (2016: 164), strategy formulation activities

will enhance the company's ability to solve problems

faced by the company. The strategic management

process will provide the best decision results because

group interactions gather a larger variety of strategies.

2.2.3 SWOT Analysis as a Strategy

Formulation Tools

According to Rangkuti (2015: 19), SWOT analysis is

the systematic identification of various factors to

formulate company strategy. This analysis is based on

logic that can maximize strengths and opportunities,

but simultaneously minimize weaknesses and threats,

the strategic decision-making process is always

related to the development of the company's mission,

goals, strategies, and policies. . Thus, strategic

planners must analyze the company's strategic factors

(strengths, weaknesses, opportunities, and threats) in

the current conditions. This is called situation

analysis. The most popular model for situation

analysis is the SWOT analysis.

3 METHODS

The form of research used in this research is

descriptive research method with a qualitative

approach. This qualitative descriptive research

approach uses a case study method. Types and

sources of data obtained through primary data in the

ICOSOP 2022 - International Conference on Social and Political Development 4

392

form of interviews and observations, and secondary

data from secondary sources obtained through books,

brochures, articles, journals, and the internet, and

examples of previous studies related to this research.

Key informants are needed in this study where the

company leadership at Siantar Ice Factory Ltd is the

main informant in this study. Determination of

research informants based on purposive and snowball

techniques. The data analysis technique in this study

uses descriptive qualitative analysis with the Miles

and Huberman Model, SWOT Matrix Analysis,

Analysis of the Internal Factor Evaluation Matrix

(IFE Matrix), Analysis of the External Factor

Evaluation Matrix (External Factor Evaluation - EFE

Matrix).

4 RESULTS AND DISCUSSION

4.1 Strategy of Siantar Ice Factory Ltd

in Maintaining the Existence of

Cap Badak Beverage Products.

The results of the research on the existence of the

Siantar Ice Factory Ltd. indicate that the Siantar Ice

Factory Ltd. is the only beverage industry company

that is the oldest in Pematangsiantar city and is still

operating today. The company focuses on the

production of soft drinks and ice bars, of which Cap

Badak is the trademark for these soft drinks. The

superior product of this company is the Cap Badak

Sarsaparilla which is favored by the public and has

been a prima donna in Pematangsiantar city since

1916.

Formulation, Implementation, and Evaluation of

Strategy to Maintain Existence

Based on the results of the research conducted, the

strategy used by Siantar Ice Factory in maintaining

the existence of this Cap Badak beverage product is

as follows:

a. Maintaining the quality and quality of drinks,

b. Doing a bottle investment system,

c. Routine in the maintenance of machines and natural

resources,

d. Improving human resources,

e. Maintain product hygiene.

Alternative Strategy Formulation

Strength Factor (S)

1. Natural resources are springs that are available in

nature for free.

2. Strategic factory location.

3. The source of electrical energy is obtained free of

charge through the Bah Bolon river which is driven

by a turbine.

4. Has won the trust of the community (consumer

trust) .

5. Distinctive and unique taste.

6. Maintaining and paying attention to quality with

GKM (Quality Control Group)

Weakness Factor (W)

1. Old production machines.

2. Family management system.

3. There is no intention from the management (owner)

in regenerating the machines.

4. The bottle system that causes bottle shortages.

5. Bottle system whose weakness is if the bottle is

broken, lost, and not returned by the buyer.

6. The product is quite hard to find.

Opportunity Factor (O)

1. Many orders from outside the island of Sumatra to

order Cap Badak products.

2. Procurement of Cap Badak bottles with plastic

bottles (PET) in 2019.

3. Unique and popular taste

4. Already have regular customers.

Threat Factor (T)

1. Family management system that can lead to

disputes, misunderstandings, discrepancies, not one

heart and thought so that clashes can occur.

2. The company sells beverage sachets and other

packages , while the Siantar Ice Factory only

produces beverages in conventional glass bottles.

3. There is no promotion so people are in danger of

being forgotten by people who don't know the Cap

Badak drink.

4. Coffee shops are spreads and becoming a trend, so

there will be many young people who do not know

the existence of Cap Badak products as legendary

drinks, and switch to drinks that are now sold in

coffee shops.

5. Competitors who try to make similar products with

Cap Badak.

Competitive Strategy of Local Beverage Companies in Preserve Their Existence to Face of Competition with Imported Drinks

393

Table 1: Internal Factor Evaluation Matrix

Internal Strategy

Factor

Weight Rating Weight x

Rating =

Score

Strength(S):

1. Natural resources in

the form of springs

that are available in

nature for free.

2. Strategic company

location.

3. Own source of

electrical energy and

obtained by utilizing

the Bah Bolon river

to drive turbines.

4. Has received trust

from the community

(Consumer Trust).

5. Unique and

distinctive taste.

6. Maintaining and

paying attention to

quality with GKM

(Quality Control

Group)

0.14

0.10

0.14

0.05

0.09

0.06

0.56

0.4

0.56

0.15

0.36

0.24

Sub-Total 0.58 2.27

Weaknesses (W):

1. The production

machines are old.

2. The management

system is still family

management.

3. There is no intention

from the directors

(owner) to

regenerate the

machines.

4. The bottle system

that causes bottle

shortages.

5. Bottle system whose

weakness is if the

bottle is broken, lost,

and not returned by

the buyer.

6. Products are quite

difficult to find, only

available in certain

places.

0.08

0.07

0.08

0.07

0.05

0.16

0.14

0.16

0.14

0.05

Sub-Total 0.42 0.79

TOTAL 1.00 3.06

Table 2. External Factor Evaluation Matrix

External

Strategy Factors

Weight Rating Weight x

Rating =

Score

Opportunity (O):

1. Many orders from

outside the island of

Sumatra to order

Cap Badak products.

2. Procurement of Cap

Badak bottles with

plastic bottle (PET)

packaging in 2019.

3. The taste is unique

and liked by the

people.

4. Already have

regular customers.

0.15

0.18

0.16

0.11

0.6

0.72

0.32

0.33

Sub-Total 0.60 1.97

Threat (T):

1. A family

management system

that can lead to

disagreements,

misunderstandings,

discrepancies, not

one heart and

thought so that

conflicts can occur.

2. Other companies

sell sachet drinks

and other packages,

while Siantar Ice

Factory Ltd only

produces beverages

in conventional

glass bottles.

3. There is no

promotion so people

are in danger of

being forgotten by

people who don't

know the Cap Badak

drink.

4. Coffee shops are

mushrooming and

are becoming a

trend, so there will

be many young

people who do not

know the existence

of Cap Badak

products as

legendary drinks,

and turn to drinks

that are now sold in

coffee shops.

5. Competitors trying

to make products

similar to Cap

Badak.

0.09

0.10

0.07

0.08

0.06

0.18

0.20

0.14

0.16

0.06

Sub-Total 0.40 0.74

TOTAL 1.00 2.71

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From the processed results of the external factor

evaluation matrix, it can be seen that the opportunity

factor has a total score of 1.97 and the threat is 0.74.

The biggest opportunity factor lies in the procurement

of rhino cap bottles with plastic bottles (PET) which

has a score of 0.72 . This factor will be very beneficial

for the company if it is immediately implemented in

2019, because with this, the company can enter its

products into supermarkets, minimarkets,

supermarkets, so that its market share is wider, and

promotions can be carried out immediately. The

biggest threat factor is other companies that sell

sachet drinks and other packages, but Siantar Ice

Factory Ltd only produces Cap Badak drinks in

conventional glass bottles, where this factor has a

score of 0.20 . This factor is related to the opportunity

factor with the previous largest score, where the

limited packaging owned by Cap Badak has an

impact on the lack of buying.

4.2 Swot Diagram

The SWOT diagram aims to find out which quadrant

the company is in and determine what strategy is right

for the company to implement according to the

assessment that has been done previously.

The results of the analysis of the IFE Matrix and the

EFE Matrix PT. Siantar Ice Factory are as follows:

1. Strength score (S): 2,27

2. Weakness score (W): 0.79

3. Odds score score (O): 1,97

4. Threat score (T): 0.74

Then the comparison of internal and external scores.

Ice Factory Ltd are:

Table 3. Ice Factory Ltd . internal and external score

comparison

Internal External

Strengths >

Weaknesses

Opportunity >

Threa

2.27 > 0.79 1.97 > 0.74

Then it can be seen that the strength score is greater

than the weakness score with a difference of (+) 1.48

and the opportunity score is greater than the threat

score with a difference of (+) 1.23. Then the results

of the analysis of internal and external factors

obtained can be described in the following SWOT

Analysis Diagram:

Diagram 1. SWOT Analysis Diagram

Based on the SWOT Analysis Diagram above, it can

be concluded that PT. The Siantar Ice Factory is in

Quadrant I by supporting an aggressive strategy, and

is a very profitable situation. Where is PT. The

Siantar Ice Factory has a great opportunity so that it

can take advantage of the existing opportunities. The

strategy that must be determined in this condition is a

strategy that supports an aggressive growth policy,

namely through development.

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