THE RELEVANCY BUSINESS ENVIRONMENT AND BUSINESS PERFORMANCE OPTIMIZATION STRATEGIES IN MANUFACTURING SMALL AND MEDIUM SCALE COMPANIES IN INDONESIA

Abstract

This research was conducted to test whether a conceptual model of manufacturing
strategy relevant when applied in different research settings, the small and medium
manufacturing companies in Indonesia. The study involved eighty-eight small and
medium scale manufacturing companies yielding response rate of 17.6%. The study
generally indicates that environmental uncertainty has no significant effect on the
choice of competitive strategy and manufacturing strategy in small and medium scale
companies. The study also indicate that both cost leadership and differentiation
strategy has a significant effect on the flexibility, cost leadership has a significant
effect on quality, differentiation strategy has a significant effect on the quality,
manufacturing strategy choices that focuses on cost is significantly influenced by the
cost leadership strategy but not by a differentiation strategy, while the competitive
strategy choices, both cost leadership and differentiation does not significantly effect
delivery strategy. Competitive strategies simultaneously effect the financial
performance, the partial cost leadership effects financial performance but
differentiation does not effect financial performance.