Analysis of Production and Consumption in Hair Artisans at Karangbanjar Village, Bojongsari District, Purbalingga

JEJAK

Journal of Economics and Policy

http://journal.unnes.ac.id/nju/index.php/jejak

Analysis of Production and Consumption in Hair Artisans at Karangbanjar Village, Bojongsari District, Purbalingga

1 , Suprapto Agus Arifin 2

1 University of Jenderal Soedirman, Indonesia

Permalink/DOI: http://dx.doi.org/10.15294/jejak.v8i2.6164

Received: July 2015; Accepted: August 2015; Published: September 2015

Abstract

Hair craft product is the leading product at Karangbanjar Village in particular and in Purbalingga Regency in general. This product has more comparative advantage among other regencies such as Demak, Sragen, Karanganyar, and Brebes. It is also the second best product in the world after Guangzhou, China. This hair craft creative industry in Karangbanjar Village can employ many workers and generate the income for most hair artisans in fulfilling their basic needs. The purpose of this research is to identify the internal and external factors and to analyze the production activity and the consumption behaviour of entrepreneurs of hair creative industry in Karangbanjar, Purbalingga. This research used the primary and secondary data. The primary data was collected from the respondents —68 entrepreneurs of hair production industry, and the secondary one was from the relevant government institutions. Some measurements were applied in this research. The Internal and External factors were identified by using SWOT analysis, while the production activity was measured by the profit analysis and the economic efficiency analysis, and the consumption behaviour was measured by the Average Propensity to Consume (APC) analysis. The result shows that: 1) Hair creative industry has more strengths than weaknesses and more opportunities than threats; (2) Hair creative industry offers high profit; 2) The entrepreneur profit coming from this industry can fulfill most of the consumption.

Keywords: internal factor, external factor, production, consumption, hair creative industry, APC.

How to Cite: Arifin, A., & Suprapto, S. (2016). Analysis of Production and Consumption in Hair Artisans at Karangbanjar Village, Bojongsari District, Purbalingga. JEJAK: Jurnal Ekonomi Dan Kebijakan, 8(2), 108-125.

doi:http://dx.doi.org/10.15294/jejak.v8i2.6164

© 2015 Semarang State University. All rights reserved  Corresponding author :

ISSN 1979-715X

Address: Jl. Prof. Dr. HR. Boenyamin No. 107, Purwokerto 53122

E-mail: arifin_ie@yahoo.co.id

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

INTRODUCTION

Some of the advantages / strengths and The good and strong economic

flaws / weaknesses will be detected on the performance of a country should be supported

behavior of the hair craft workers, both are by the existence of a strong real sector as well.

seen as producers and as consumers. From the Micro, Small and Medium Enterprises (SMEs)

producer side, for example, the workers who is one of the main pillars in the development of

are willing and able to improve the production the real sector. Some researches (Hill, 2001;

techniques and marketing will be able to Kyaw, 2008; and Agyapong, 2010) explained

produce more productions with good quality that the development of SMEs has been the

and can earn more profits anyway. Another focus of development in the developing

example, hair entrepreneurs who constantly countries. Government support for MSME

learn and actively participate in seminars or development is also conducted in the

training in business management will be able developed

to manage the business efficiently, which are Tambunan, 2007; Aranoff et al., 2010; and

reducing the unnecessary costs and increasing Okun et al., 2010). Based on the empirical

the value-added production. Meanwhile, on evidence and also some other researches

the side of consumers, the hair craft workers (Kyaw, 2008; Radam, 2008; Sari, 2008; Bowen

and entrepreneurs who can apply the scale of et al., 2009; and Ardic et al., 2011), it can be

priority on a number of daily life needs will be affirmed that the SMEs play an important role

able to optimize the revenues to meet the in improving the economy of a country.

primary and more important needs so the life One of the leading sectors of SMEs in a

pattern will be order in economic way. region is the creative industries. In Purbalingga

the workers and the creative industry, which is the top leading

Another

example,

entrepreneurs who are disciplined in utilizing in the region, is hair craft. Hair craft creative

their income and avoiding the waste will be industry existing at Karangbanjar Village,

able to set aside part of their income for Purbalingga Regency is able to reduce the

savings.

unemployment rate (30.47 percent) and can What is interesting and becomes the meet the needs of decent living (KHL) of the

concern in this research is that in Arifin’s hair crafter community (82.5 per cent have had

research (2011), 82.5 percent of the hair artisans decent living) (Arifin, 2011). Although

have had a decent life, but there are some hair economically this creative industry is

artisans whose home is not feasible (ground promising, but there are still many

floor, tin roof, bamboo/board house wall). weaknesses, such as the availability of raw

Besides, some of their children who attend materials, capital, and marketing (Arifin, 2008;

school only graduate from junior high school Ihua, 2009; and Bowen et al., 2009). In

even from elementary school. Under these addition, there is also the marketing problem

conditions, an important question to ask is because the networking is still limited and the

whether their income from hair craft has been marketing strategy is still unconventional,

able to meet their daily basic needs, such as because of not utilizing yet the Information

clothing, food, shelter, including basic Technology (IT) well, the poor management

education and health standards. The purpose and quality of human resources (Sari, 2008;

of this research is to identify the internal and Bowen et al., 2009; Kushwaha, 2011, Popescu,

external factors, to analyze the activity of 2011; Arifin and Rachmat, 2013).

production and consumption behavior of

110 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

entrepreneurs in the hair creative industries at industries in Malaysia, which then lowers the Karangbanjar, Purbalingga.

SMIS contribution to the real output. The data Previous researches related to the

used is survey data of 1985-2005 of Department analysis of production and consumption and

of Statistics Malaysia. This analysis is supporting the aims of this research are

conducted in two stages, measuring the described as follows. Fening et al. (2008)

progress in technical using the supplier data examined the relationship between the quality

of analysis framework developed by Coelli management practices and the performance of

(1985) (Data Envelopment Analysis), and SMEs in Ghana. Based on the literature, this

examining the effect of progress technique on paper adopts a set of variables from the quality

labor productivity using the regression. management practices including leadership,

The result is that the SMIs adopt the strategic planning, human resources, focus on

technology slowly. SMIs pay the wages lower customers, information and data analysis,

than the big companies so the small companies process management, and quality and

get the last queue in obtaining the skilled operational. There are seven hypotheses

labor. The regression results indicate that the postulated in examining the relationship of

production workers directly have a negative these variables with five indicators of SME ’s

effect on productivity. SMIs need to have the performance those are profitability, customer

workers that are more educated and provide a satisfaction, sales growth, employee morale,

formal structured training for workers. This is and market share.

an important step to move to a greater level of The survey was conducted through 80

efficiency. Efficient companies can also be questions to a sample of 200 small businesses

achieved if they have better access to new that employ fewer than 50 workers in all

technologies through licensing agreements, sectors in Ghana. The questionnaire uses five

joint ventures with foreign partners, and points in Likert scale to assess the quality

export contacts with foreign buyers and management practice that can affect the

suppliers.

performance. The statistical analysis uses SPSS In connection with the financing to to calculate descriptive statistics, reliability

SMEs, Kyaw (2008) examined the SMEs in analysis, and correlation and regression. The

Myanmar in which of the many problems faced findings in this research is a significant

by SMEs, funding becomes the crucial one. relationship between the variables of quality

SMEs are the biggest part of the economy of management and business performance. This

Myanmar, both in terms of numbers, the paper also explains the strengthening of the

contribution to employment, also the output argument that quality management practices

and investment. Myanmar's economic growth can improve the organizational performance in

is highly dependent on the development of large and small scale of business enterprises.

SMEs in the private sector. The role of SMEs Likewise is the research of Jajri research

has become more important in strengthening and Ismail (2009) on the importance of the

the national competitive advantage and rapid role of small and medium industries (SMIS) in

economic integration into the ASEAN region. economic development in Malaysia. The

The policy recommendations offered is purpose of this research is to analyze the low

that the policy must focus on SMEs and the labor productivity in small and medium

private sector as a viable development strategy

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

to the activity of production and their development. The real step is a policy to

for industrialization

and

economic

consumption behavior. Meanwhile, the stabilize the macro-economic fundamentals, to

secondary data is collected from the related improve the loan infrastructure from the

government offices and agencies. The government, and to increase the demand and

secondary data required includes the identity supply from the perspective of SME financing

of the business, the value of production, the conditions. All aims to provide more accessible

total employment, wages, capital, assets, financing for all SMEs in Myanmar.

production costs, profit, marketing, etc. Meanwhile, with regard to the welfare

In relation to the needs of primary data and consumption, Meyer and Sullivan (2010)

collecting, this research uses a sampling examined how to measure the level of welfare

technique that requires population data. Based of the poor by using proxy of income and

on the hair craft industry data obtained from consumption. In the method of analysis, there

the village office of Karangbanjar, in 2014 the are five empiric strategies to test the quality of

population in the hair craft creative industry income and consumption data, which compare

center at Karangbanjar was as many as 204 the reports between income and consumption,

business units. Based on the preliminary investigate other evidence of the low accuracy

survey, it was observed that the business units of statements of income or consumption,

in the creative industry centers have similar compare how well the accuracy of the data in a

business characteristics (homogeneous) so that standard so that the ratio of income and

the sample in this research was drawn at consumption can be achieved especially for

random using a sampling technique that is families whose resources are low, examine the

simple random sampling.

comparison of household survey report in the Simple random sampling method is a form of receipt of the data transfer to the

method of selecting the sample size in which smallest data in the administrative at the

the member of population has an equal chance transfer evidence, and evaluate the measures

to be elected as the member of sample. The of income and consumption by comparing it

method for determining the sample uses the with another measure of welfare. The result of

following formula (Iqbal, 2002): this research is the discovery of substantial

2 evidence that consumption has a better proxy

than income to measure the well-being for where n is the number of samples, n is

those who have little resources. The results the number of the population, and e is the

support the use of consumption as a material percentage of sampling error that can be for evaluating the effectiveness of transfer tolerated, 1% - 10% .From the above formula, programs and the general trend in poverty. the number of samples in this research is:

RESEARCH METHODS

 Ne 2 2

This research was conducted in the hair craft centers at Karangbanjar Village,

Bojongsari District, Purbalingga Regency by The number of samples taken from the using the primary and secondary data. The

existing population is as many as 68 primary data comes from the hair artisans

respondents.

through questionnaires and interviews related This research focuses on the analysis of production and consumption of hair artisans

112 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

at Karangbanjar, Purbalingga. To that end, the weaknesses (W), and external factors that data analysis technique used can follow the

include opportunities (O) and threats (T). The stages described.

explanation of internal and external factors can First, the analysis used to identify and

be seen in Table 1. The insight study in each analyze the internal and external conditions of

component can be seen in Table 2 and Table 3. hair craft is a SWOT analysis. SWOT Analysis

Table 2 describes the key phrases related to is a framework for analyzing the current

internal factors, while Table 3 explains the conditions that have and are happening and

focus of questions and key phrases related to the potential conditions in the future to make

external factors.

changes in a company or organization. This Table 2 describes in details some of the analysis is actually a method to analyze the

key phrases that can be built for digging the situation (situation analysis) that could affect

components of Strengths, among others, the the existence of a company or organization

availability of personnel / qualified human (Rangkuti, 2000). As research conducted by

resources and adequate facilities, high Permadi (2015) that the SWOT analysis is used

motivation, the neat work, the availability of to examine the profile and development

sufficient funds, etc. From these key phrases, strategy of carica small industry regency, this

some focuses of questions can be developed research also use that analysis for the internal

related to the components of strengths and external condition mega-analysis of the

including excellence or merit possessed by the hair craft creative industry in Karangbanjar,

business unit, competitive movement, and the Purbalingga.

ability of resources (endowments) owned. Component of SWOT analysis consists of internal factors that includes strenghts (S) and

Internal & External Factors in SWOT Analysis Components of SWOT

Table 1.

Definition All assets of business unit/organization will help in

Strengths utilizing the opportunities and threats (internal factors)

All weaknesses owned by the business unit/ organization Weaknesses

in utilizing the opportunities to meet the necessity (internal factors)

business Opportunities

External

condition/tendecy

of

the

unit/organization that gives opportunities to increase the performance and competition (external factors)

business Threats

External

condition/tendency

of

unit/organization that gives negative effects on the performance and competiton (external factors)

Source: Freddy Rangkuti, 2000.

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

Table 2. Internal Factors of SWOT Analysis

Components

Key Phrases

Strengths

Availability of trained, skilled, and harmonious personnel

Available facility provision High personnel motivation Neat/good work/task Adequate funding provision, etc.

Weaknesses Unwell-built internal communication

Weak leadership Low work motivation Tasks / work are not resolved

neatly/well Unskilled/less skilled personnel Low trust to each other

Source: Freddy Rangkuti, 2000.

Table 3. External Factors of SWOT Analysis

Components

Key Phrases

Opportunities Institutional policies (government / association / community) to enhance the role and performance of the business unit / organization more widely

Tendency / interest in the public interest to more participate / support / join

Awareness of self-actualization needs of each business unit / organization

The situation surrounding environment that supports the development of businesses / organizations

Threats The development of business competitors / other similar organizations

Institutional policies (government /

114 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

association / community) that limit the movement and development of businesses / organizations

The situation surrounding environment (external) that hamper the development of businesses / organizations

The decline in public sympathy toward businesses / organizations

Source: Freddy Rangkuti, 2000.

Meanwhile, the key phrases that can be Meanwhile, the key phrases that can be built to dig the components of weaknesses

built on the components of threats, among include internal communication that is not

development of business built up well, weak leadership, weak work

others, the

competitors / other similar organizations motivation, task / job that is not resolved

similar, the institutional policies (government neatly/well, unskilled/less personnel, and low

/ association / community) that limit the trust to each other. Some focuses of questions

movement and development of the business / can be developed on the components of

organization, the environmental situation weaknesses including the badness/ugliness

around (the outside) that hamper the owned by the business unit, the elements

development of the business / organization, needed to be strengthened, and the possibility

and the declining of public sympathy towards of weakness in managerial system and

business / organisasi. Some focuses of operational business units.

questions that can be developed include efforts Table 3 describes the key phrases that

exerted by business competitors that cannot be can be built related to the components of

done within their own business units and the opportunities, among others, institutional

possibility of changes in the outside that can policies (government

association /

give negative impact.

community) to enhance the role and In this research, the production activities performance of the business more widely, the

will be analyzed using two measurement tendency / interest in the public interest to be

techniques as follows: (1) determining the more participated / supporting , the awareness

amount of cost, income (revenue) and of self-actualization needs of each business

earnings (profit), and (2) measuring the level unit to be increasingly recognized the

of economic efficiency. Both of these existence of its business, and the situation

techniques will be complementary in the surrounding environment that supports the

analysis.

business development. From these key The first technique is described as phrases, some focuses of questions can be

follows. Cost in terms of the economy is all developed, such as the possible changes that

the burden to be borne by the producers to occur outside that can be a positive influence

provide the goods that are ready for on the development of the business unit.

consumption by the consumer (Sudarsono, 1986).

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

The products are the result of the Definition of profit generally is the combination use of various factors of

difference of revenue over the costs in the production. The use of production factors

certain period. In economic theory, profit is an greatly influence the income producers (hair

increase in the wealth of the company, while in artisans) that are closely related to the costs

accounting, profit is the difference in income incurred. The production costs can be grouped

realized from transactions that occur at the into three, namely fixed costs, variable costs,

time as compared to the costs incurred in a and total cost.

given period. The elements that are part of Fixed costs are expenses which amount

forming the profit are revenues and expenses. does not depend on the size of the production

By grouping the elements of income and quantity. Even when production was

expense, the different measurement results temporarily halted, then the fixed costs remain

will be found including gross profit, operating to be incurred in the same amount. For

profit, profit before tax and net profit. Income example

measurement is important for determining the depreciation, interest on loans, and leasing the

the means

of

production

performance or achievement of a business and place of production.

investment policy Variable costs are expenses which

(http://kelompoklaba.wordpress.com/2008/08 number fluctuates according to the changes in

/27/laba, uploaded August 27, 2008). the quantity of product produced. The greater

In this research, the profit in question is the quantity of production is, the greater the

the difference between total revenue (TR) and variable costs to be incurred will be. Costs

total cost (TC). Mathematically, it can be included in the variable costs hair craft are the

written as follows:

purchase of raw materials, labor costs, and

π = TR - TC

other maintenance costs.

in which:

Meanwhile, total cost is the sum of fixed

=Profit

costs and variable costs in process of

=Total Revenue production. The total costs can be formulated

TR

=Total Cost as follows (Boediono, 1992):

TC

The second technique is to measure the TC = FC + VC

level of economic efficiency. Economic in which:

efficiency is the ratio between income and TC = Total Cost

expenditure. In a company, an effort to FC = Fixed Cost

improve efficiency is usually related to smaller VC=Variable Cost

costs to obtain a certain result, or using certain Revenues or receipts (revenue) is the

costs can obtain more results. This means a income produced the from production

waste is very reduced to a minimum level and activities each year (Makeham, 1991). Revenues

something making it possible to reduce the can be formulated as follows:

cost is for the sake of efficiency (Rahardja, TR = P .Q

in which:

Soekartawi (1987), TR

According

to

=Total Revenue efficiency is an effort to use the smallest input P

=Price (each unit) to get the maximum production. In relation to Q

=Quantity (the number of sold the concept of efficiency, it is known as the products)

concepts of technical efficiency, price

116 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

efficiency or allocative efficiency, and how to manage the family finances so that all economic efficiency. Technical efficiency

the needs of family life can be assured with the would be achieved if the farmers are able to

available income, in other words how to keep allocate such factors of production that the

the balance between income and expenditure. high production can be achieved. When the

Tabulation analysis is used to find out farmers benefit greatly from the farming, for

how consumption pattern is and whether the example due to the effect of the price, then it

income received by the crafters is sufficient to can be said tha the farmers allocate their

meet their expenditure. The measuring factors production in price efficiency. To be

instrument used is APC (Average Propensity to able to calculate the economic efficiency we

Consume) that is how many percents of the can use the formula (Soekartawi, 2002):

revenue spent on consumption (C as a

a = R/C percentage of Y) by comparing the R= P ʸ .Y

expenditures of consumption and income C= FC + VC

(Gilarso, 1991: 178).

a = {( P ʸ. Y)/ (FC + VC)} There are three possible of APC values. in which:

First, if the APC> 100%, the consumption (C)> R

Reevenue

income (Y). Second, if the APC = 100%, the

consumption (C) = income (Y). Third, if the Py

Cost

APC <100%, the consumption (C) <income (Y). Y

Output price

To that end, based on the value of APC, FC =

Output

the test criteria is divided into three. First, high VC =

Fixed Cost

category, that is, if consumption is greater than The criteria test is divided into three.

Variable Cost

income, it means that income cannot meet the First, R/C ratio>1, means that the farming is

needs of consumption pattern. Second, the economically advantageous. Second, R/C ratio

medium category, that is, if consumption is = 1, means the revenue is only enough to cover

equal to income, it means that income is the production costs. Third, R/C ratio<1,

sufficient to meet the needs of consumption means the level of farming is economically

pattern. Third, the low category, if unprofitable.

consumption is less than income, it means Household consumption can be defined

that income can meet the needs of as household expenditure on the purchase of

consumption pattern.

goods and services for final to get satisfaction The results of the analysis of production or to meet their needs. The consumption

and consumption in the previous explanation function itself is expressed as a function that

then are compared and analyzed. If the value describes

of consumption (expenditure) is greater than consumption level of households with incomes

the income of the production, the lives of these in an economy (Sukirno, 2002: 38).

artisans is still not economically viable. Principal problems faced by the

Conversely, if the income is able to meet the household economy is whether the incoming

consumption, it can be said that the artisans revenue is sufficient or not to meet all the

have had a decent life with their living as the needs of a family. Therefore, the challenges

hair artisans.

faced in managing the household economy is

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

RESULTS AND DISCUSSION

infrastructure that connects this village to Karangbanjar village is one of the villages

other villages as well as to the center of in Bojongsari District, Purbalingga Regency.

Purbalingga city is sufficiently available and Besides famous as the hair craft center,

adequate.

Karangbanjar is also a tourist village in Bojongsari district overall has a type of Purbalingga. The atmosphere that is cool and

soil that is grouped in association of brown beautiful and not much touched by the human

latosal and regasol composed of inductive hands makes this village worthy as a tourist

material-intermediate volcanic. The condition village. Besides its friendly citizens, life in this

of alluvial soil area of 137.829 ha is a land with village is calm and peaceful. There are still

a high fertility rate and an area of 10.532 many sprawling rice fields and verdant trees

hectares of land with an average fertility rate. along the rural roads that are now easily

Soil structure agglomerate with moderate passed because they have been paved.

permeability with argillaceous texture. Level of Purbalingga

acidity of soil pH is from 6 - 6.5 with moderate concerned on this tourism and hair craft

organic matter content.

village. The government has designated it as The people of Karangbanjar village tourism village, in which it is packed as a

mostly work in the field of food crops, package that offers places that can be visited

plantations, livestock and fisheries. The types by the visitors in a series of trips in the village,

of crops grown are in the form of rice, corn, those are Bojongsari Water Attractions

cassava, sweet potatoes, peanuts, soybeans, (Owabong), Reptile and Fruit Garden,

vegetables and fruits that are seasonal crops. Campgrounds, Hair Craft Small Business

The type of plantation crops include rambutan, Centers, Fishing Lake, and Homestay, and also

mango, clove, duku, and coconut. Livestock some places that are planned to be built as the

generally include cattle, buffalo, horses, goats, places of recreation. Karangbanjar has been

sheep, chicken and duck. Fishery development designated as the tourism village since 29th

is potential enough because it is supported by January, 1992 by a Decree of Purbalingga

the good flow of the river water and the Regent.

supporting soil texture.

Karangbanjar is one of 14 villages in On the other hand, some people also Bojongsari District, Purbalingga Regency,

develop small businesses, both domestic and Central Java Province. Karangbanjar is

small industries. Small businesses include approximately 148.351 hectares, with the

broom crafts, hair crafts, traditional food boundaries of administrative areas as follows.

processing (banana chips, knapsack, ampyang, The North side is bordered by Beji and

satu cookies, Koyah, and rengginang), the Sumingkir villages while the South is by the

manufacture of paint, wood lathe crafts, rattan, Munjul village. The East is by Bojongsari

and the manufacture of bricks. Among the village while the West is by Kutasari village.

wide range of small businesses, hair craft Karangbanjar village is located 5 km

businesses is the longest and hereditary one. northwest of Purbalingga city and connected

However, until now this business remains by the macadam that can be passed by almost

promising and growing despite more all types of two-wheeled and four-wheeled

competition in this modern era. Hair craft vehicles. Travel time to Purbalingga city is

industry is a product that is unique and rarely about

15-20 minutes.

Transportation

found in other areas. Purbalingga is one of the

118 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

few regions in Indonesia that still exists in this modifications, such as Java bun, hairpin bend, hair craft product. In Purbalingga hair craft is

mody bun, modern bun, cepol, lungsen, the leading product. Therefore, this leading

braids, hair pieces, fir, kordion, horsetail, product has been well known both

sonya, and also various types of wig. Raw domestically and overseas. This leading

materials required include two types, genuine product is manufactured by big and small/

human hair and synthetic hair. The types of household industries. The big scaled-hair

raw material become the characteristic or industry is more focused on the production of

uniqueness thus this business has the specific wig (synthetic) hair craft oriented in

form and appeal. This business has its own international markets (exports), while the

market and is relatively uncommon in other small/household industry is more focused on

areas.

the production of real hair craft oriented in Hair craft products made of genuine hair domestic market.

are more expensive than synthetic materials The large-scaled hair industry is the one

because it is difficul to find the genuine hair. with foreign investors (PMA) from Korea.

The prices of the genuine hair range from Currently there are 16 units of hair company of

Rp600,000-Rp1,000,000 per kilo while the PMA (Disperindagkop Purbalingga 2011). This

synthetic hair on average is Rp50.000- large-scaled hair industry is able to absorb

Rp70,000 per kilo. The need of raw materials many workers, especially women. From the

has reached 10 kg in a month. The hair quality, available data, the hair industry is able to

especially the genuine hair, also affects the absorb

17,650 people high and low price of this raw material. For (Http://suaraperwirapurbalingga.wordpress.co

example, the long loose hair is more expensive m). Meanwhile, the small-scaled hair industry

than the short hair (e.g., the raw materials of is produced by the hair craft creative industry

hair extention of 50 cm long hair length or center in Karangbanjar village, Bojongsari

more).This is because the short hair is district.

relatively more difficult in the basic treatment Karangbanjar village is the only hair craft

prior to further processing. Thus, this craft creative industry center existing in Purbalingga

industry needs not less capital. and has been established over 40 years ago.

Scarcity and high cost of raw material This creative industry center is the hair

become the major problem of most business industry concentrated naturally. For the

units although there are some dominant people of Karangbanjar, creative industry

business unit stating otherwise. Some sources center is one source of the main income

of raw materials come from Purbalingga but because the education level limitations make

some also come from other areas. the people of Karangbanjar utilize their skills

Local sources are usually the synthetic of hair crafting to earn a living. Therefore,

material in the form of hair waste material of most of the economic life of rural communities

the hair factory/enterprise existing hair in is highly dependent on the survival of hair

Purbalingga while some are from other areas craft businesses where approximately 80% of

and usually in the form of genuine hair and the population are the hair artisans.

just a few the synthetic ones, such as from Hair craft products cover various types of

Jakarta, Cirebon, Garut, Cilacap, Semarang bun

with numerous

Wonosobo, Brebes,

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

Surabaya, etc. Uniquely each individual even Lombok, who want to see the process of business unit tends to have self-sufficiency

making the hair crafts while travelling. whether in getting the raw materials or

Therefore, it is difficult to break the marketing. They prefer to strive individually

relationship among the hair craft, tourism, and not collectively.

Purbalingga, and Karangbanjar. The craft reseults are usually sold

Internal and external conditions of directly by the owner of industry to the

business cover all the potential, ability, wealth, customers who are mostly the bridal makeup,

characteristics, also innovation and creative shops, and entertainment workers. These

ideas that are owned by the hair craft business buyers often come directly to the site to order

units. The analysis used to identify the internal the model in question or to take orders. The

and external conditions of this business is the average of manufacturing this commodity is to

SWOT analysis.

accept special orders according to the The components of SWOT analyzed are customer’s demand. Marketing areas of this

the internal factors covering Strengths(S), hair craft can penetrate the foreign markets

Weaknesses(W); and the external factors such as Korea, Japan, Australia, Germany,

covering Opportunities(O) and Threats(T). Taiwan, Saudi Arabia, Europe and the United

The SWOT analysis on the hair craft creative States. Ninety-five percent yield false hair they

industry at Karangbanjar village can be are exported to foreign countries. In the

presented in the following explanations. international market, craft hair Purbalingga

Strength (internal factor) is the entire ranks second after China Guangzhou

assets of the business unit / organization that (Disperindagkop Purbalingga 2013). However,

will assist in taking advantage of opportunities after given brand in Korea, sometimes this

and in facing the threats.

commodity is then imported and sold in Based on the analysis of the Strength Indonesia with a more expensive price. For the

factor, it showed that the hair craft creative local market it usually works with the

industry at Karangbanjar village has the ability collectors in other regions such as Jakarta,

to absorb the labors both from local or outside Bandung, Semarang, Surabaya, Medan,

the village. In terms of capacity in production, Kalimantan, and Bali.

the industry has proven to produce in lots of Great efforts of the foreign investors are

quantity and excellent quality, which supported by the Local Government and

outperforms the hair craft production centers DEKRANAS (National Crafts Council) in

in other areas outside Purbalingga Regency. making business licensing so as to invite more

This can be seen as the results of the previous investors come to Purbalingga to invest so that

research (Arifin, 2008), which proves that the the craft can develop further. This craft has

hair craft industry in Purbalingga has been proven to absorb so great labors that this

comparative and competitive advantages as craft industry will have a promising hope in

compared to other regencies that produce the the future.

similar products, such as Karanganyar, Brebes, Karangbanjar village often gets visits

Demak, and Sragen. Even, the hair craft from university students and groups/

industry in Purbalingga nationally has a communities from other regions such as

position as the first rank of comparative Medan, Pontianak, Jakarta, Bali, Bandung and

advantages.

120 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

These advantages are analyzed from craft industry at Karangbanjar Purbalingga also several aspects, among which are the

have benefited financially because they have uniqueness of the product that include

reached their needs of decent living (KHL) in authenticity, rarity, difficult to imitate, and

accordance with the minimum wage of specialized labors. In addition, the overall hair

regencies (UMK).

craft products in Purbalingga also have Furthermore, the internal factor as the extended to overseas, which are exported to

opposite of Strength is Weakness, which is the several countries in the USA, Australia, Korea,

entire deficiency owned by the business unit / Taiwan, Japan, and Germany. For this reason,

organization in taking advantage of the internationally the hair craft products of

opportunities to meet the necessity. Based on Purbalingga has the second rank after

the primary data analysis, it is found that there Guangzhou,

has not been a good cooperation between the Purbalingga Regency, 2011).

China

(Disperindagkop

artisans of the hair craft industry in The other Strength factor of the hair

in raw material craft industry of Karangbanjar Purbalingga is

Karangbanjar,

both

procurement and product marketing. to have a low concentration and small barriers

Some efforts have been conducted by the to entry. This result is based on the research

government to build a cooperation among the of Arifin and Priyono (2013). That is, according

artisans, for example by establishing a to the understanding in a clump of industrial

cooperative, but so far it has not been able to economy, these conditions indicate that the

build a unity / cooperation. It seems that the industry is approaching the characteristics of a

labor culture they have employed for years perfect competition market. In the mainstream

cannot be forced to change. They are quite economic flow (classical), perfect competition

comfortable with working individually in is the ideal condition in which the market can

obtaining the raw materials and marketing. work optimally or the tug process between the

This condition can be described as demand and supply of a product occurs in

follows. Ideally through the cooperative, the accordance with the market mechanism.

very expensive raw materials can be purchased Another Strength that can be extracted

collectively so that the price could be cheaper from the hair craft industry is the division or

and the payment can be paid in installments, specialization in the work during the

but it is difficult to realize because they find it production process. There are stages of

more convenient to buy the materials production that require a certain skill /

individually to the certain hair collectors in specialty, such as the core stage of

certain areas outside Purbalingga. Another manufacturing the bun, so the more skilled the

example, each hair artisan has different hair artisans/workers are, the more efficient

purpose of marketing products. Ideally, the result will be, because the productivity will

through collective way or the cooperative, the certainly be higher than the unskilled ones.

marketing objectives can be determined The artisans/workers who have special

together and of course the marketing costs can skills will earn appreciation, either in the form

be suppressed in such a way that is more of higher wages/salaries and other kinds of

efficient, but these efforts did not bring any appreciation, such as becoming a leader

result because the artisans prefer to compete among other workers. The workers in the hair

in acquiring the consumers and the new

JEJAK Journal of Economics and Policy Vol 8 (2) (2015): 108-125

purpose of marketing or maintaining the old exploited. First, the number of productive age one.

population in Karangbanjar is high enough

A classic problem that also becomes the (67%). It certainly can provide the needs of Weakness factor of every small business is

workers, especially young ones who have high capital. Hair craft industry in Karangbanjar is

motivation. Second, the support of the local also facing the capital problem. Prices of raw

government and the community both in materials of the genuine hair that is very

Karangbanjar and in Purbalingga is significant expensive then become one of the causes why

to the development and progress of this hair craft industry. Third, the support of the

the artisans must prepare the substantial financial institutions, such as BPR and BKK, is

capital. During this time, their capital partly quite large in providing credits to the hair

are from their own and partly from loans to

artisans.

financial institutions such as Rural Credit Bank One more external factor that is not only (BPR), the District Credit Agency (BKK), and important to watch out but also becomes a others. potential to grow is Threat, which is the

Another Weakness found in the hair condition / external tendency of business unit craft industry is the weak business networking.

/ organization that has the negative impact on The hair artisans have no association or

the performance and competition. Some cooperative to unite the vision, mission and

Threat factors faced by the hair craft industry principles.

in Karangbanjar is the more difficult Meanwhile, one of the external factors

procurement of the raw materials. The human that can be a benefit for the industry is

genuine hair raw material is relatively Opportunities. Opportunity is a condition /

decreasing due to the decreasing number of external tendency of business units /

the hair collectors, who are those diligently organizations that provide opportunities to

collect the human genuine hair from the improve the performance and competition. In

beauty salon, barber, and certain people who the hair craft industry of Karangbanjar there

still want to collect the remnants of hair pieces are several potential opportunities to be

to be sold to the collectors.

Table 4. Recapitulation of Revenue, Cost and Profit of Hair Craft Industry

in Karangbanjar, Purbalingga (Rp/month)

Statistics

Profits Total

Revenues (R)

Costs (C)

3,180,000.00 Source: Primay Data (Data processed).

122 Agus Arifin and Suprapto, Analysis of Production and Consumption in Hair Artisans

Table 5. Recapitulation of Economic Efficiency of Hair Craft Creative Industry

In Karangbanjar

Statistics

Ratio (R/C) Total

Revenues (R)

Costs (C)

1.27 Source: Primary Data (Data processed)

Besides the analysis above, production income (Gilarso, 1991: 178). In this research, activity is also analyzed by measuring the

the income in question is a net revenue of the economic efficiency. Furthermore, economic

entrepreneurs or called as the profit efficiency can be seen in Table 5. It can be

entrepreneurs. While consumption is a seen that all respondents have a ratio of R / C

household consumption of entrepreneurs greater than 1. This means that all business

that is the consumption expenditure for daily units / hair craft entrepreneurs in these

and monthly needs. The calculation centers have been economically efficient in

recapitulation of APC value can be seen in running their business. The total calculation

Table 6.

(all respondents) obtained the ratio of R / C In Table 6 it can be seen from the 1.34; while the average calculation of each

entrepreneurs (business unit) that their business unit obtained a ratio of R / C 1.33. In

revenues from the hair craft business can fact, there is a business unit which ratio of R /

meet their consumption needs. It is

C reaches 2.05, which means that the characterized by APC value of 0.53, which business that occupied is already very

means that 53% of their income are used for profitable. Meanwhile, there is also a

consumption, which means that there are business unit that has the smallest ratio of R /

still remaining for savings or motive

C 1.01, but still showed values above 1, which precaution. If seen from the APC value of

means to be economically viable. each business unit, as many as 28 business

Tabulation analysis are used to units (41%) have high APC value above 1,

determine how the consumption patterns of which means that consumption is greater the artisans and whether the earned income than income (C> Y) or their income cannot is sufficient to meet the expenses. The

meet the consumption. Meanwhile, as many measuring instrument used is APC (Average

as 40 business units (59%) have low APC Propensity to Consume), which is how many

percents of revenue spent on consumption (C value or the income can meet the as a percentage of Y) by comparing the

consumption.