TICA
Industrial Mapping in Capital
City District of Jakarta by
using Analytic Hierarchy
Process and Strategic
Management Approach
Anna Felicia Kusumaningtyas 1,a, Andri Wijaya 2,b,
and Arian Dhini3,c
Industrial Engineering, Universitas Indonesia, Depok.
Email: anna.felicia@ui.ac.id,
b
Email: andri.wijaya91@ui.ac.id 3 Industrial Engineering,
Universitas Indonesia, Depok.
c
Email: arian@ie.ui.ac.id
1,2
a
R
egional development is important for the existence of an area. One method to develop a
region can be applied by focusing on its core competence. This study discusses the core
competencies of DKI Jakarta as a way for empowering the area. The method consists of
Analytic Hierarchy Process and Strategic Management Approach. The result stated that the core
competencies of DKI Jakarta are transportation and textile industries. Then, a strategic roadmap is
made to expand those industries.
Keyword : core competence, Analytic Hierarchy Process (AHP), strategic management
1. Introduction
Development of a region is necessary for enhancing
public welfare and its existence. However, every
region has its strength and weakness to be developed,
including human resources, material resources,
infrastructure support, and governmental support.
Nowadays, industrial sector becomes the main aspect to
be empowered as the competitive advantage of a region.
It is considered as an essential factor to create a new job
employment and increase regional revenue.
The concept of core competency was introduced by
Prahalad and Hamel (1990) as a competitive advantage
for future competition. Core competency is defined
as an integrated bundle of skills and technologies
that delivers value to the company and customer. In
some counties, core competency could be used as a
development foundation, since it states the competitive
advantage of those counties. Markides, Prahalad, and
Hamel (1990) stated that core competency must have
these characteristics : offer a real value for customers,
should be difficult for competitors to imitate, and
provide potential access to wide variety of markets.
From regional economy perspective, core competency
is a group of integrated skills that could be used to
build regional competitive advantages by exploiting the
uniqueness of it (Depperin, 2007). Radiah and Rosli
(2009) stated that Japan applies “One Village One
Product” concept, while Malaysia does “One District
One Industry” policy. In Indonesia, we have a similar
program, named “Satu Kabupaten Satu Kompetensi Inti
(Sakasakti)”.
Vol. 21 No. 1, Juni 2013
43
TICA
However, there are some regions who have not found
their local competencies, yet. Capital City District of
Jakarta, abbreviated in Indonesian to DKI Jakarta, is an
example of a region that has not recognized and mapped
its core competencies.
Therefore, this research focuses to help Capital City
District of Jakarta to discover its potencies. The output
will form an industrial map generated by Analytic
Hierarchy Process (AHP) and Strategic Management
approach.
2. Research Methodology
Regional core competencies can be determined by
reviewing some internal and external factors, based on a
region’s industrial sector and subsector. These required
data, which could be found in Badan Pusat Statistik
(BPS), will be learned thoroughly so that it could
interprete the prime industry from Capital City District
of Jakarta.
After choosing the prime sector, the subsector can be
appointed. Prime subsector is set by learning the BPS
data as before, then we can get an industry that has the
biggest added value. This subsector will be determined
as the core competency of Capital City District of
Jakarta.
The determination of Jakarta’s core competency
implements AHP (Analytic Hierarchy Process)
method. AHP could be used to analyze quantitative
or qualitative data. Mostly, AHP is utilized to solve
multi objective and multi criteria problems based on
preferences ratio of each element.
Weighing in AHP process eases us to make a decision,
since the decision maker has cognitive and thought
inadequacy. AHP offers a problem solving way that
involves all of complexity sources with many criteria
(Latifah, 2005).
Core industrial subsector must be based on
some criteria. These criteria are chosen by Dinas
Perindustrian dan Energi DKI Jakarta and enriched
by literature study. Besides, we also arrange interview
with four experts, who come from an academician and
three industrial practicians. According to the interview
results, we determine the weight for each criteria. To
point the main industrial sector, we collect various
secondary data of each sector that meet those criteria.
Meanwhile, deciding the subsector is just based on
existing subsector in Jakarta. Verification and validation
are necessary by interviewing experts.
When core industry of Jakarta was established, the
next step is formulating strategies for each subsector
by using strategic management approach. Strategic
management approach involves three stages of strategy
arrangements, which are input stage, matching stage,
and decision stage.
Input stage is a step to collect data to recognize
actual condition of an industry. By using tools of
Internal Factor Evaluation Matrix and External Factor
Evaluation Matrix, internal and external condition of an
industry could be explained.
Internal Factor Evaluation (IFE) is a strategic
management tool for auditing or evaluating major
strengths and weaknesses in functional areas of a
business. The IFE matrix can be created using the
following five steps:
1. Identify both strengths and weaknesses in all
industrial sector. It is suggested to identify 5-10
internal factors, but the more, the better.
2. Assign a weight that ranges from 0.00 to 1.00 to each
factor. The weight assigned to a given factor indicates
the relative importance of the factor. Make sure the
sum of all weights is 1.00.
3. Assign a 1 to X rating to each factor. Rating captures
whether the factor represents a major weakness
(rating = 1), a minor weakness (rating = 2), a minor
strength (rating = 3), or a major strength (rating = 4).
4. Multiply each factor’s weight by its rating. This will
give a weighted score for each factor.
5. Sum the weighted scores for each factor. This
provides the total weighted score for an industrial
subsector.
Total weighted scores well below 2.5 point to internally
weak business. Scores significantly above 2.5 indicate a
strong internal position.
External Factor Evaluation (EFE) matrix method is a
strategic-management tool often used for assessment of
current business conditions. The EFE matrix is a good
tool to visualize and prioritize the opportunities and
threats that a business is facing. The EFE matrix is very
similar to the IFE matrix. The major difference between
the EFE matrix and the IFE matrix is the type of factors
that are included in the model. While the IFE matrix
deals with internal factors, the EFE matrix is concerned
solely with external factors. External factors assessed
in the EFE matrix are the ones that are subjected to
Vol. 21 No. 1, Juni 2013
44
TICA
the will of social, economic, political, legal, and other
external forces.
determinant of the strategy. This point shows the
strategy that a company should follow.
Matching stage has a goal to generate suitable strategy
for developing a business unit. Tools that are often
used in this stage are SWOT Matrix and BCG Matrix.
However, only SWOT Matrix that will be used in this
research. SWOT Matrix, stands for Strength-WeaknessOpportunity-Threat, provides information that is
helpful in matching the firm’s resources and capabilities
to the competitive environment in which it operates.
As such, it is instrumental in strategy formulation
and selection. Involving four cells in two rows and
two columns, it records the strategies from internal
and external factors stated in input stage. The top left
cell contains Strength-Opportunity Strategies, which
pursue opportunities that are good fit to the company’s
strength. Weakness-Opportunity Strategies, located
on top right cell, overcome weaknesses to pursue
opportunities. The bottom left cell, named StrengthThreat Strategies, identify ways that the firm can use its
strength to reduce its vulnerability to external threats.
The last one, Weakness-Threat Strategies, establish a
defensive plan to prevent the firm’s weaknesses from
making it highly susceptible to external threats.
On the X axis of the IE Matrix, an IFE total weighted
score of 1.0 to 1.99 represents a weak internal position.
A score of 2.0 to 2.99 is considered average. A score of
3.0 to 4.0 is strong. On the y axis, an EFE total weighted
score of 1.0 to 1.99 is considered low. A score of 2.0 to
2.99 is medium. A score of 3.0 to 4.0 is high.
The final stage, named decision stage, aims to choose
a feasible strategy to be implemented. By considering
both external and internal factors as stated in input
stage, industries could pick an appropriate strategy for
their sustainability. Common tool to evaluate and pick a
trategy is Internal-External Matrix.
The Internal-External (IE) matrix is another strategic
management tool used to analyze working conditions
and strategic position of a business. The Internal
External Matrix or IE matrix is based on an analysis
of internal and external business factors which are
combined into one suggestive model. The IE matrix is a
continuation of the EFE matrix and IFE matrix models.
The IE matrix is based on the following two criteria:
1. Score from the EFE matrix -- this score is plotted on
Y-axis
2. Score from the IFE matrix – this score is plotted on
X-axis
The IE matrix works in a way that we plot the total
weighted score from the EFE matrix on the Y axis
and draw a horizontal line across the plane. Then take
the score calculated in the IFE matrix, plot it on the
X axis, and draw a vertical line across the plane. The
point where horizontal line meets vertical line is the
These strategies would be a base for composing an
industrial development road map of Jakarta.
3. Results
Capital City District of Jakarta has an important role
as the capital of Indonesia, so that various business
sectors are centralized there. According to Badan
Pusat Statistik (2011), manufacturing industry gives
the largest contribution for Gross Regional Domestic
Product (GRDP) of Jakarta. During 2011, industrial
sector contributed 15,81% of Jakarta’s GRDP.
Meanwhile, this sector was growing for about 4,06%
from 2010 to 2011, above the average growth of national
industries.
For establishing the main industrial sector, AHP is
applied during process initiation. In this case, there are
3 levels considered, shown in the following diagram.
Fig. 1. Hierarchy of core competency determination
The first level, named Level 0, is the main goal of this
research, which aims to decide a core competency
for Capital City District of Jakarta. The next level,
called Level 1, there are 9 criteria that are divided
into sociocultural criteria and economical criteria.
Sociocultural criteria involves human resource
examination, environmental effect, supports from
goverment policies, and contribution to GDRP.
Economical one include the quantity of a business unit,
supply chain management, added value, investment
Vol. 21 No. 1, Juni 2013
45
TICA
rate, and export value. The last level, named Level 2, is
used to list the examined industrial sectors.
Fig. 1 shows the hierarchy of core competency
determination process. This process involves 4
experts as our respondents, whose judgments would
be analyzed by using pairwise comparison matrix in
Expert Choice 2000 software. These opinions must be
validated by calculating their inconsistency ratio, based
on each eigen value.
Those expert judgments consist of 1 to 9 ratio between
two criteria, which shows the significancy of a criteria,
compared to the other. A criteria that has larger value is
considered to have stronger potency. Scoring 1 = equal,
3 = slightly favors, 5 = strongly favors, 7 = very strongly
favors, 9 = extreme favors. Further details could be seen
in the following figure.
After composing criteria’s weight by using AHP matrix,
decision for core competencies of Jakarta could be
decided by comparing two industries in each criteria.
Data used for this comparison are gotten from various
articles.
Thus, it can be concluded that automotive and textile
industry have the largest core competencies among
the others. Automotive industry, which scores
0.234 of 1.00, consists of 2 main subsectors : motor
vehicles, trailers, and semi trailers; and other transport
equipments. Textile industry, which scores 0.144 of
1.00, are divided into textiles, wearing apparel, also
tanning and dressing of leather. These subsectors are
determined by reviewing their existence in Jakarta
in Figures 2011. However, only automotive industry,
who has the biggest impact to Jakarta, would be
examined further to compose some strategies for their
development.
Motor vehicles, trailers, and semitrailers subsector
employs 26.441 employees on its 35 business
units throughout Jakarta.With added value of Rp
37.814.382.479 in 2011, this industry could contribute
7,78% to GDRP of Jakarta. However, it affected
environment so badly by consuming 16,6% of total
fossil fuel used at Jakarta in 2011.
Other transport equipments subsector, has 16 business
units throughout Jakarta with about 18.331 employees.
Having export value of 19,66% of total export from
Jakarta, it contributes 7,78% to GDRP of Jakarta.
However, the investment rate for this industry seems to
be low, just 5,69% of total investment in Jakarta.
Besides weaknesses and strengths, they also face some
opportunities and threats. Jakarta’s population that
grew 1,41% per year would create a potential market
for these subsectors. Moreover, population growth in
Jakarta could provide a big amount of human resources
to be employed. Consumer index, which gains 110,4
point in 2012, seems increasing by 1,04 point per year.
It means that people’s purchasing power is getting
higher from year to year. Indonesian International
Motor Show, raw material availability, and government
policy have to be considered as opportunity, too. In
other hand, inflation rate reaching 4,12% (year-to-year)
must be noted to be its biggest threats.
According to those actual conditions, IFE and
EFE Matrix for each subsector can be composed
Fig. 2. Pairwise comparison among criteria
Vol. 21 No. 1, Juni 2013
46
TICA
distinctively as a base for further examination. Motor
vehicles, trailers, and semitrailers subsector scores 3.37
out of 4.00 in IFE Matrix, whereas other transport
equipment scores 2.97 out of 4.00. Generally, they can
be concluded as having a strong internal position.
Their opportunities and threats are used for arranging
EFE Matrix, which scores 2.43 for motor vehicles,
trailers, and semitrailers then scores 2 for other
transportation equipment. It can be inferred that they
have a weak external position.
Fig. 3. IFE Matrix for Motor Vehicles, Trailers, and Semitrailers Industry
Fig. 4. IFE Matrix for Other Transportation Equipments Industry
Fig. 5. EFE Matrix for Motor Vehicles, Trailers, and Semitrailers
Vol. 21 No. 1, Juni 2013
47
TICA
Fig. 6. EFE Matrix for Other Transportation Equipments Industry
Fig. 7. SWOT Matrix for Motor Vehicles, Trailers, and Semitrailers Industry
Fig. 8. SWOT Matrix for Other Transportation Equipments Industry
Those factors, which are listed in IFE and EFE Matrix,
would be used to compose SWOT Matrix for both of
them. These following SWOT matrixes will contain
various strategies that could be applied for each
subsector.
After arranging SWOT Matrix for strategy generation
stage, we can decide the best strategy by using IE
Matrix. Mapping IE Matrix is not as difficult as
composing EFE and IFE Matrix. As stated in previous
chapter, IE Matrix shows a firm’s position based on its
internal and external position. Motor vehicles, trailers,
and semitrailers industry (number 1) has a significant
strength in its internal factors. However, it can not
handle external factors properly, which makes it placed
on the left-middle cell.
Subsector of other transportation equipments does
not have internal strength as strong as the previous
subsector, so it is just placed on “Average” cell. In
addition, its external factors make it located on
“Medium” cell.
According to the literature, a firm that has strong
IFE score with medium EFE score must grow and
expand its business process. It is able to be realized by
differentiation and opening a large number of business
unit. Thus, it is better for motor vehicles, trailers, and
semitrailers industries to expand their business process
horizontally. Integrating SWOT and IE matrix will
result the best strategies for this industry are expanding
Vol. 21 No. 1, Juni 2013
48
TICA
is expansion, which is related to grow or build firm’s
business. Meanwhile, other transportation equipments
subsector must hold and maintain the existing business
units.
Acknowledgement
We are indebted to Fauzia Dianawati who has given
us this project and Rahmat Nurcahyo-Farizal for their
pioneering work in analyzing the core competency of
Kabupaten Bekasi. We thank Sri Bintang Pamungkas
and Romadhani Ardi of their advices in the criteria
selection and weighing; Teuku Y. Zagloel, Akhmad
Hidayatno, and Dana Santoso of being our experts; and
Parulian Tambunan of his time to give our required
data. This work was supported by Dinas Perindustrian
dan Energi Provinsi DKI Jakarta.
Fig. 9. IE matrix for both industries
distribution network and adding business unit by
empowering human resources and goverment support.
Meanwhile, other transportation equipment, who
has average score for both IFE and EFE, must take
a stabilization strategy, which aims to maintain
its business process. The real strategy would tend
to increase efficiency by utilizing effective human
resources and apply a better investment regulation for
attracting investor. In the long term, they can reach
a stabilized position that enables them to grow and
expand their business units.
4. Conclusion
Core competencies of Capital City District of Jakarta
was determined from the largest GDRP contribution,
those who gives the biggest economic contribution
in Jakarta. Based on Analytic Hierarchy Process,
automotive industry has been chosen as the main
competency in Jakarta, with score 0.234 of 1.00.
Automotive industry is the most potential sector based
on 9 criteria, which are human resource, environmental
effect, supports from goverment policies, contribution
to GDRP, number of establishment, supply chain
management, added value, investment rate, and
export value. It is divided into two subsectors : motor
vehicles, trailers, and semitrailers; and other transport
equipments. Each subsector would be analyzed further
to create a development roadmap, based on IFE-EFE
Matrix, SWOT Matrix, and IE Matrix.
References
Badan Pusat Statistik Provinsi Jakarta. 2011. Jakarta
Dalam Angka (Jakarta in Figures).
Bradford, Robert W., Peter J. Duncan, and Brian Tarcy.
Simplified Strategic Planning : A No-Nonsense
Guide for Busy People Who Want Results Fast!
Departemen Perindustrian Republik Indonesia.
2007. Peta Jalan Pengembangan Kompetensi Inti
Industri Daerah. Jakarta.
Latifah, S., 2005. Prinsip-prinsip Dasar Analytic
Hierarchy Process. Sumatera Utara: e-USU
Reposritory.
Nurcahyo, Rahmat, Farizal, Edwin Setiadi, and
Saparudin. February 2012. Penentuan dan
Pengembangan Kompetensi Inti Kabupaten
Bekasi. Jurnal Teknik Industri, Vol. 13, No. 1,
page: 37–42.
Prahalad, C.K. and Hamel, G., 1990. The Core
Competence of the Corporation. Harvard Business
Review, May- June.
Prahalad, C.K. and Hamel, G., 1994. Competing for the
Future. Boston – MA: Harvard Business School
Press.
Radiah, A.K. and Rosli, 2009. Success Factor for Small
Rural Entrepreneurs under One District One
Industry Programme in Malaysia. International
Journal of OVOP. Vol 5, No. 2, pp. 147–162.
IE Matrix has shown that the most appropriate strategy
for motor vehicles, trailers, and semitrailers industry
Vol. 21 No. 1, Juni 2013
49