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TRANSFORMATION OF BUSINESS CONDUCT FOR BURAS CHICKEN AGRIBUSINESS IN SOUTH SULAWESI
HASANUDDIN REMMANG1, ACHMAD ANZHARI2, SITTI MUJAHIDA BAHARUDDIN3, ASKARI
HASANUDDIN4, AUDITYA AMALIA5
1Universitas Bosowa, Email: Email.remmanghasan@gmail.com 2STIM Lasharan Jaya, Email: anzhariachmad18282182@gmail.com 3Sekolah Tinggi Ilmu Ekonomi (STIE) Amkop, Email: mujahida_41@yahoo.com 4STIA Prima, Email: askari.hasanuddin@gmail.com 5STIM Lasharan Jaya, Email: audityaamelia@gmail.com
Abstract- The transformation of the free-range chicken agribusiness trade system in South Sulawesi refers to the changes that have occurred in the free-range chicken farming industry, especially in Gowa and Maros Regencies as the focus of research because the two regions are centers of freerange chicken farming in South Sulawesi. This transformation involves various methods, including increasing the capacity of breeders, using modern technology, improving feed quality, product diversification, collaboration and strengthening partnerships, and implementing sustainable agricultural practices. Collaboration and strengthening partnerships are important aspects of this transformation. Breeders, traders, distributors and other related institutions in South Sulawesi, especially in the Gowa and Maros Regencies as a research focus, must work together in marketing, distribution and market development. With this collaboration, free-range chicken breeders can expand market share, gain access to financing, and other resources. With the transformation of the free-range chicken trade system in South Sulawesi, it is hoped that a more efficient, sustainable and competitive livestock industry will be created. This study aims to obtain the results of a study regarding the transformation of the treatment of free-range chicken business development in the province of South Sulawesi. The method of analysis in this study is to use a structural equation model to examine the relationship between variables according to the proposed hypothesis. The variables studied in this study consist of exogenous variables including: production, marketing, and financial management capabilities; the intermediate variable in this study is the development of sales; and variable increase in business profit as an endogenous variable. The three types of variables are built based on a theoretical approach that forms a constellation of relationships between variables, where each variable has dimensions and indicators. The respondents in this study were a group of free-range chicken breeders and collectors in Gowa Regency, 150 respondents and in Maros Regency, 100 respondents. The results of the study found that in general the respondents of freerange chicken breeders in Gowa and Maros districts had production, marketing and financial management capabilities to increase sales volume and the impact on increasing profits and creating a sustainable business.
Keywords- Production Capabilities, Marketing, Financial Management, Sales, and Business Profits
INTRODUCTION
The livestock products business is one of the promising businesses along with the level of orders for various types of consumer needs, both from various walks of life and from several industries, such as hotels, restaurants and catering businesses. However, the phenomena found indicate that the prospects for the free-range chicken market have not been able to encourage the growth of the number of business units that have been able to survive the post-covid-19 pandemic several years ago.
The development of chicken farm production is one of the main drivers in the field of agribusiness which has contributed to increasing people's income. This fact can be seen from the size of the gross regional domestic product reaching 43.68 percent compared to other sectors in South Sulawesi. On the other hand, the success of national economic development is demonstrated by three main points, namely; 1) developing people's ability to meet their basic needs (basic needs), 2) increasing self-
esteem, and 3) increasing people's ability to choose (freedom from servitude) which is one of human rights. Thus, the potential for free-range chicken business, which is supported by demand which tends to increase, has not yet been able to become a thriving industry. Some areas of South Sulawesi, especially in Gowa and Maros districts, are still facing a number of constraining problems, including: the low level of skills and knowledge needed in business management to improve the quality and quantity of production, availability of business capital, feed prices and market access. The phenomenon found in general is that domestic chicken breeders still use business management that is very simple and impressive as it is. The maintenance patterns found generally still use small land and some use natural methods without adequate feeding so that it has an impact on reproduction patterns. Likewise with marketing activities, where people generally market chickens that are not old enough through collectors so that the prices received are relatively cheap due to economic pressure. The study in this study relates to the development of production, marketing and financial activity models that are oriented towards increasing sales volume and increasing operating profit by posing research questions, namely: 1) how does business behavior based on production, marketing and capital aspects affect the development of free-range chicken sales volume, 2) how does the development of sales volume affect the increase in free-range chicken business profits, 3) how does business behavior indirectly affect based on aspects of production, marketing and capital of business actors on increasing profits through free-range chicken sales volume in Gowa and Maros districts. METHODOLOGY
In this study, the data used were qualitative, which were quantified and arranged in the form of a cross-section. The cross section method is the collection of data in the required period of time (Husain, 2004). The research design is grouped into descriptive research to describe the characteristics of variables related to phenomena that occur based on the perceptions of respondents, in this case free-range chicken farming business actors. As for answering the research hypothesis, explanatory research is used, namely research that examines the relationship between variables. The variables studied were: production capacity with symbols (£1), marketing capabilities with symbols (£2), and financial capabilities (£3). These three variables are exogenous variables or independent variables. Furthermore, the development of sales with the symbol (nl) as the intervening variable, and business profitability with the symbol (n2) as the dependent variable (dependent variable or endogenous variable). The population in this study were all domestic chicken breeders in Maros and Gowa districts in South Sulawesi Province in 2013, totaling 250 people who were business owners (Office of the Livestock Service Office of the Province of South Sulawesi, 2013). Furthermore, the determination of the number of samples is done by using saturated sampling. Sugiyono (2008) suggests that a saturated sample is a sampling technique when all members of the population are used as samples. Furthermore, taking samples based on the existing population allows researchers to generalize with very small errors. Another term for a saturated sample or census, where all members of the population are sampled. Data tracking was carried out using documentation, observation, questionnaires, and interview techniques. Secondary data was collected based on documentation techniques which are data collection techniques from documents that are relevant to the problem under study. Meanwhile, primary data collection was carried out through the following steps: 1) observation, namely direct observation of the object under study to obtain more accurate information, 2) questionnaire, namely collecting data through written questionnaires using a closed questionnaire type through a set of questions containing alternative answers based on a Likert scale, 3) Interviews, namely researchers conducting direct interviews with respondents by asking a number of questions at once as a cross check of the questionnaire data. RESEARCH RESULT Structural Equation Modeling
The use of Structural Equation Modeling (SEM) is based on two modeling approaches, namely the measurement model and the structural model. The two models each contribute, both to the magnitude of the size or value of the relationship of each variable and indicator as well as the structure of the relationship between variables which describes the constellation of relationships between variables that is built on the basis of theory or theoretical constructivity.
Measurement Model
An empirical model can be said to meet the criteria if the absolute fit measurement results show goodness of fit on the RMSEA measure. The test results show that the RMSA value is close to 1 so that it can be said that the resulting model meets the goodness of fit index requirements. The measurement model of all latent variables shows that the magnitude of the contribution of each dimension or manifest variable is above the specified degree of conformity, namely 0.7 with a calculated t value greater than the critical t value of 1.645 obtained through an alpha of 0.05 in degrees of freedom (df) of 250. Furthermore, the variance extracted value obtained is above the recommended value, namely 0.5. Structural Models
The results of data processing obtained a full model path diagram as shown in the following table.
Figure
Source: Data Processing Results, Lisrel,
1. Full Model Path Diagram
2014
H -
-■ „..............
Figure 3. Structural model and measurement of t values
Source : Data Processing Results, 2014 Test the hypothesis
The formulation of structural equations between construct variables used to test the hypothesis in this study is as follows.
/ = 0,409^ + 0,425 + 0,206 + 0.694
(5.386) + (4.043) + (3.023) 77 = 0,303^ + 0,316^2 + 0,196^3 + 0.52457 + 0,9875
(2.878) + (2.197) + (2.768) + (3.207) Test Hypothesis One
7 = 0,409 ^ + 0,425+ 0,206 Ç3 + 0.694
The results of path analysis obtained the magnitude of the contribution of the overall direct influence of the independent variables on marketing development by 39 percent. This amount is far greater than the indirect effect through the independent variables, namely 0.098 or 9.8 percent. Meanwhile, the magnitude of the direct influence contribution is obtained by multiplying the path coefficients of each independent variable. The influence value based on the path coefficient shows that the marketing ability variable is more dominant, has a significant level of direct or indirect influence on marketing development compared to other variables, and is followed by the production capacity variable. Overall, the contribution of the influence of the three independent variables (production ability, marketing, financial management) on marketing development can be said to be quite significant, namely 0.5 or 50 percent. Thus the results of the first hypothesis test are in accordance with the proposed hypothesis. Second Hypothesis Test
The formulation used for testing the first hypothesis is as follows.
7 = 0,303^ + 0,316^2 + 0,196 <^3 + 0.52457 + 0,9875
Based on this equation, the magnitude of the contribution of the influence of sales development on business profit is (0.5245)2, namely: 0.2751 or 28 percent. Furthermore, the calculated t value is 3.21 greater than the critical t value of 1.703 so that it can be said that the sales development variable has a significant influence on the business profit variable or the results of the second hypothesis test are in accordance with the proposed hypothesis.
Third Hypothesis Test
The formulation used for testing the third hypothesis is as follows. 7 = 0,409 + 0,425^2 + 0,206 Ç3 + 0.694
7 = 0,303^ + 0,316£2 + 0,196 <^3 + 0.52457 + 0,9875
The level of significance of the total influence can be indirectly known through the calculated F value with the following formulation: [(R2)/K] / [(1 - R2)/(n - k - 1) Dimana:
R2 : standardized quadratic loading K : the number of variables that follow n : number of respondents
Determining the value of the F table can be done through the formulation of the formula as follows.
FINV( probability, deg_freedom) The calculated F value obtained is 1.4939 while the F table value obtained is 1.2333 at alpha 0.05 where df1 = 245 and df2 = 250. Thus the simultaneous influence of production capability, marketing and capital management variables on business profits through marketing development is significant, thus the statistical test results are in accordance with the hypothesis proposed in this study. The variable that dominates the indirect effect on business profit through marketing development is the marketing capability variable, followed by the production capability variable. Thus it can be said, either directly or indirectly, the marketing capability variable has a dominant influence on business profit. DISCUSSION
The results of the analysis explain that there is an influence of business behavior based on aspects of production, marketing and financial management on the development of sales in free-range chicken
farms in Gowa and Maros districts. Furthermore, it was found that the marketing capability variable has a dominant influence among the other independent variables and is followed by the production capability variable. On the other hand, the significance level of the influence of each independent and intervening variable is quite significant on operating income. So it can be stated that in general, small-scale free-range chicken farm business actors in the two regencies of Gowa and Maros have production, marketing, capital management, and marketing development capabilities that significantly affect operating profit.
The results of the respondents' responses indicated that the majority of respondents responded that production capabilities were based on efforts to find various ways to increase the quantity of freerange chicken livestock production. This indicates that in general respondents tend to try to create new methods or ideas in increasing the quantity of their production based on the development of entrepreneurial character among free-range chicken farming business actors in the districts of Gowa and Maros. Ajzen (2005) suggests that attitude is a response to an attitude object that influences a person to support or not support, agreeable or not through a cognitive, affective, and psychomotor evaluation process. Furthermore, Harris et. al. (2000), the success of an entrepreneur is based on abilities or competencies, namely: knowledge, skills, willingness, and individual qualities shown through personality values such as the desire to realize new ideas or ideas to support the business activities being carried out. While Timmons (1978), identified several characteristics of entrepreneurs, including: 1) having power and driving force, 2) dealing with failure, 3) having initiative and personal responsibility, and 4) tolerance for uncertainty. Thus it can be stated that the behavior of domestic chicken farming in Gowa and Maros districts generally seeks to increase domestic chicken production through creativity and innovation. This is based on internal and external factors that shape a person's attitude in perceiving a stimulus through his cognitive, affective, and conative abilities. Domestic chicken business actors generally have creative and innovative abilities which are demonstrated through personality values based on entrepreneurial-oriented attitudes and behavior.
Partially, production capacity has a significant positive influence on sales development, especially with regard to the ability of breeders to provide many choices, both in terms of size and price levels, which are attractive to consumers. In addition, free-range chicken farm business actors pay attention to the level of control related to the balance between the amount of livestock production and the number of market needs as well as the timeliness of market distribution, so as to overcome the occurrence of excess or shortage of inventory and the timely sale of products that are carried out correctly so as to avoid losses. Production capability is not only based on the number of products produced, but also based on the ability to control the smooth production process so as to be able to balance with the desired capital, marketing and sales capabilities. Production capability has an indirect positive effect that is less significant on operating income through sales growth as indicated by the positive contribution of the loading factor of 0.034 or 3.4 percent compared to the direct effect of 0.09 or 9 percent. This indicates that the ability of domestic chicken breeders to increase sales development is not absolute from the production of managed livestock, but can be sourced from other breeders with a profit-sharing system or selling to collectors. Rasyaf (2000) argues that the sale of native chickens still adheres to a traditional marketing system where the buying and selling of native chickens is carried out through collectors, both juveniles and juveniles, and then distributed to the market.
The findings in the field show that not a few free-range chicken farmers in Gowa and Maros districts are involved in the free-range plasma system by receiving seeds or chicks (DOC) and animal feed along with medicines and selling them back to the plasma nucleus to be raised again for a certain period of time. The results of the enlargement are then handed over to the collectors at an agreed price level. Saptana et al., (2002) suggested that poultry farming has developed so far through a plasma nucleus partnership system, capital owners as the core and breeders as plasma who provide cages, equipment and labor to receive feed, vaccines, control and control of production programs. Saptana further stated that it is not uncommon for breeders to be in a weak position, especially with regard to bargaining power because everything is determined by the owners of capital. This is an
indication of the lack of contribution from the aspect of production capability to sales development which has an impact on increasing profit or operating profit. Based on the two results of the analysis above, it can be explained that the contribution of the direct influence of the production capacity variable on sales development is far greater than the indirect effect by taking into account other variables, namely marketing ability and capital or financial management ability on sales development. Furthermore, the direct effect of the production capacity variable on profit or business profit is much smaller than the indirect effect through sales development. So that increasing business profits is far more important if the company emphasizes production capabilities that are oriented towards sales development than if it is oriented towards business profits. Thus the achievement of domestic chicken farm profits can be realized through production capabilities that are oriented towards increasing sales by taking into account marketing capabilities and financial management capabilities.
Marketing capability for small-scale businesses is generally constrained by access to market information and the strong role of capital owners who are willing to buy and accommodate from several chicken breeders at a certain price level. Under these conditions it is an obstacle for some breeders to be able to increase sales growth which in turn has an impact on increasing their business profits. This study discusses the effect of marketing capabilities on increasing sales development and its effect on increasing operating profits. Gusasi and Saade (2006) suggest that differences in operating profit can be determined by marketing capabilities through sales development, so that the differences in benefits and profits obtained at each level of business scale can be clearly defined based on marketing management.
The results of the analysis show that marketing ability has a positive influence contribution of 42.5 percent on sales development. The influence contribution is shown through three dimensions and nine indicators of marketing ability. The most dominant indicator contributing to increased sales is an indicator of product distribution related to the ability to adapt to consumer needs, both in terms of product quantity and quality as well as the timeliness of delivering products to consumers. The next dimension is the target market, especially related to the ability to plan target markets and market segmentation. Solomon & Elnora (2003), that segmentation is "The process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics". Market segmentation can assist managers in utilizing their resources effectively and efficiently in order to improve service and customer satisfaction which in turn can increase the number of sales through regular and potential customers. From this opinion it can be said that market segmentation is a customer-oriented manager's policy and cost savings. This emphasizes the importance of customer orientation (current customers) as a more cost-effective way to build customer loyalty which has an impact on a profitable business. Increased customer loyalty will be an opportunity for the formation of advocates for companies in disseminating information to other consumers, such as: friends, relatives and colleagues so they want to buy products/services from the same company. Thus it can be stated that marketing capabilities based on the target and market area through the development of market segmentation are demands for free-range chicken breeders to be able to increase their business sales volume. Meanwhile, other factors that play a role are the broad dimensions of the market, especially those related to indicators of expanding the distribution of goods. In this study explained the contribution of the effect of marketing ability on business profits through sales growth. The results of the analysis show that the magnitude of the contribution of the indirect effect of the marketing capability variable on business profits through sales growth is 0.2397 taking into account the variables of production capacity and financial management ability. Meanwhile, the contribution of the direct effect of the marketing ability variable on business profit is 0.035, much smaller than the indirect effect. In other words, the influence of the marketing capability variable is far greater in its contribution to increasing business profits when paying attention to aspects of production capabilities and financial management capabilities that are oriented towards increasing sales than if marketing capabilities are only oriented towards achieving profits or business profits without considering the aspects of production capabilities and financial management and sales development. Gaspersz (2008) suggests that marketing strategy is closely related to distribution
channel activities in increasing the sales turnover of a product. This indicates that achieving sales targets is inseparable from the company's ability to plan and execute appropriate marketing programs. Furthermore Freddy Rangkuti (2009), that sales volume is indicated by achieving the target number of sales of products or services assessed, both in units and rupiahs in a certain period of time. Freddy further stated that companies that have good performance can be measured by the growth in the number of customers, increased sales volume through appropriate marketing programs which will have an impact on achieving the desired company profit or operating profit. While Dalimunthe (2004), that the amount of profit earned depends on the amount of sales of goods marketed through well-planned marketing programs.
Thus it can be stated that marketing capabilities require analysis of several aspects of marketing before starting a business because the company's main source of income comes from selling the products it produces. In this regard, marketing capabilities have a major contribution in increasing operating profits through achieving sales targets by taking into account production capabilities and financial management capabilities. Based on the results of the analysis related to the hypothesis testing proposed in this study, the results are in accordance with the researchers' expectations that marketing ability has an indirect influence on increasing operating profits through the development of domestic chicken sales in the districts of Maros and Gowa.
Furthermore, regarding the ability to manage finances or business capital, it was found that one of the weaknesses generally faced by small and medium enterprises in evaluating the level of success achieved, namely due to a lack of attention to the importance of financial records related to the activity of spending and receiving finance from each business activity carried out. Not a few businesses have failed due to the lack of skills and knowledge of business actors in managing finances, including those related to recording and evaluating business finances. Business financial management requires reports or financial records related to business activities carried out. Based on the results of the analysis, it shows that most of the respondents have a fairly good ability to manage their finances. Furthermore, from the results of the SEM analysis, information was obtained that the ability to manage finances had an influence on sales development by 0.042 or 4.2 percent and had a positive value taking into account the variables of production capability and marketing ability. The magnitude of the contribution of this influence can be said to be less significant or does not have a large impact, but has an influence in increasing sales development by taking into account other variables. Gill et. al. (2006) argued that financial management is part of business control based on financial statement records which can provide an overview of the level of business success and assist in planning business development in the future. The financial reports contain information, including the achievement of profit or loss, the amount of costs and capital, so that they can be used as a basis for determining business development plans through production, marketing, sales and plans for achieving the expected profit in the future. Furthermore, the Bank Indonesia Financial Management Institute (2013), that in general, the objectives of financial management include: relating to achieving future funding targets, protecting and increasing owned wealth, managing cash flow (incoming and disbursing money), and managing debts and receivables. Thus, through proper financial management, it does not absolutely have a direct effect on sales development, but makes a major contribution to the smooth running of other activities, such as marketing, production, and administration so that it greatly assists the company in determining the direction and goals of business development in the future, especially those related to sales development.
One of the company's main goals is to achieve profit or also known as profit oriented. The achievement of maximum profit is of course based on the ability of business owners to manage various activities needed for the smooth running of their business, including through good financial management. The ability to manage finances is a form of skill that needs to be possessed by every business actor, including small and medium scale business actors. In this case the research unit is the free-range chicken farm business in the districts of Gowa and Maros. As for the contribution of indirect influence to business profits through sales growth, it was obtained at 0.1234 or 12.34 percent taking into account the variables of production capability and marketing ability. Meanwhile, the direct effect of the financial management capability variable on business profit yielded a result of
3.84 percent which was much smaller than the indirect effect through sales growth. This indicates that the ability to manage finances has a much greater contribution if it is based on a sales growth orientation than if it is profit oriented. Manage or manage finances well, so you can know when a company needs funding, and know the company's performance through the level of business profitability achieved within a certain period of time. Thus proper financial management can provide opportunities for companies to develop towards increasing profitability through production, marketing and sales activities.
CONCLUSION
Based on the responses of respondents, free-range chicken farming business actors in the districts of Maros and Gowa generally have good production, marketing and financial management capabilities, as well as the development of sales and operating profit achieved so far. Furthermore, the development of livestock business sales in the Maros and Gowa regencies is generally determined by the ability of the production, marketing and financial management of business actors as indicated by the positive influence of the variables of production capacity, marketing and financial management on sales development. On the other hand, partially marketing ability has a dominant contribution to influence on sales development, followed by production ability. Meanwhile, the development of freerange chicken farm business sales has a positive effect on operating profit. Next concludes that the achievement of operating profit is determined by the ability of production, marketing, money management through sales development. This can be seen from the magnitude of the indirect influence of endogenous variables that have a positive value on operating profit through the intervening variable of sales development. On the other hand, directly or indirectly, the development of sales has a dominant and positive influence on operating income.
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