SWOT Analysis of Strategy Development in Prominent Industries of Underdeveloped Regions: A Case Study of the Kepulauan Mentawai Regency, West Sumatra, Indonesia

2.1 Underdeveloped areas

Underdeveloped areas are regions that exhibit a lower level of development compared to other areas in their vicinity [20, 21]. The development of underdeveloped areas represents a planned effort to transform a region inhabited by a community facing various socio-economic challenges and physical limitations, into a developed region with a community whose quality of life is on par with, or not significantly behind, other communities [22]. The criteria for determining underdeveloped areas are outlined in the Decree of the Minister of State for Development of Underdeveloped Regions of the Republic of Indonesia, Number 001/KEP/M-PDT/II/2005 [23]. This decree specifies that the designation of underdeveloped areas is based on several criteria, which include economic conditions, quality of human resources, infrastructure facilities, regional capacities, accessibility capabilities, and regional characteristics.

Various researchers have conducted studies on the problems of underdeveloped areas. However, studies on this topic are still limited, as they are predominantly carried out in developing countries. Studies conducted by Hidenori et al. [20] investigated the transformation of underdeveloped areas through the role of economic growth in the case for India which focused on Uttrakhand. They found that foreign direct investment was urgently needed to encourage industrialization and tourism development to get out of the status of underdeveloped areas. Furthermore, this study is more likely to be found for case studies in Indonesia, so that the same problem has been studied in various regions in Indonesia. For example, Jumon et al. [21] examined the dynamics of growth in underdeveloped areas in Indonesia, focusing on the Provinces of Papua and West Papua, in which they recommend a comprehensive economic policy to help these two provinces out of the category of underdeveloped areas.

Furthermore, Maskur et al. [24] studied the development of underdeveloped areas in East Java Province, with a focus on Bondowoso Regency through the effectiveness of policies to reduce inequality between regions, they found that the implementation of the policies implemented were categorized as effective because there was a clear legal basis implemented by regional apparatus organizations in carrying out achieving targets which has been set.

Then, Rahman and Kumala [25] explained that in North Halmahera Regency the facilities or infrastructure were inadequate for the development of the tourism sector, especially marine tourism. Minimal access is the inhibiting factor for this area, it is difficult to achieve independence from an economic and social standpoint. In addition, Syahza and Suarman [26] found that in the coastal areas of Riau Province, there are still challenges in economic conditions for local communities, especially in rural areas. They argued that the concept of development in urban areas tends to make some areas lagging behind.

Further studies were carried out by Abidin [27], who examined the infrastructure of underdeveloped areas in South Buton Regency. They found that this area did not yet have adequate infrastructure for the trade sector as a support for the economy of the lower middle class people. Ineffective regional government policies are the reason this sector is underdeveloped because this trading sector is not supported by unstable market conditions for local producers.

On the other hand, Murni [28] analyzed the condition of underdeveloped areas in the Boalemo District. From a socio-economic perspective, the majority of the people are still classified as poor because they are unable to manage agricultural land due to a lack of knowledge. This problem demands immediate resolution so that development can focus on fundamental issues, such as physical and non-physical development for the community.

In contrast, Teralsyah and Taher [29] examined the contribution of village funds, gross fixed capital formation, and labor force participation rates to economic growth in 62 underdeveloped areas in Indonesia. They found that the government needed to enhance village fund budgets and gross fixed capital formation to stimulate economic growth in the analyzed underdeveloped areas.

Based on insights from various relevant literature, it is evident that strategies to accelerate the development of underdeveloped areas are needed in order to improve the regional economy and encourage progress in the surrounding areas.

2.2 Leading sector

Leading sectors refer to the comparative values between sectors, whether they are local, national, or international. A sector is said to be a leading sector at the international level if it shows higher added value in a country compared to the same sector in other countries [30]. Development based on the potential of a region, sectorally, will certainly impact the overall economic conditions. The added value generated will encourage the formation and pace of economic development [31].

At the national level, a leading sector is defined as a sector in an area that has higher competitiveness when compared to the same sector in other regions [32]. Moreover, a leading sector is a sector that can compete with the same sector in other regions. When the sector is able to compete with others, it demonstrates its ability to export.

Various researchers have conducted studies on leading sectors in different countries. For instance, Wijaya et al. [7] analyzed economic performance based on leading sectors in Malinau Regency. They found that economic growth after regional autonomy showed a shift in the economic structure, which was dominated by the primary sector. Putra and Pratiwi [6] studied potential leading sectors to be developed in the Province of Kalimantan. They discovered that the mining, water supply, waste management, and recycling sectors were the base sectors that needed to be developed.

Further studies were conducted by Tallo et al. [33] on the leading sectors in East Nusa Tenggara Province. They found that mining, agriculture, forestry, and fisheries are the leading sectors that need to be developed. Additionally, Isabhandia and Setiartiti [34] examined the development of leading sectors in Progo Kulon Regency. They identified the crucial sectors for the basis of leading sectors as mining and quarrying, wholesale and retail trade, car and motorcycle repair, government administration, defense, and social security.

Additionally, Amalia [35] examined the determinants of leading sectors in the regional economy in Bone Bolango. She found that the sectors with advanced, basic, and competitive criteria are the financial and service sectors. On the other hand, Satrianto and Sasongko [36] examined the determinants of implementing leading sectors in Blitar. They discovered that several base sectors, including large and retail trade, information and communication, and financial and insurance services, require increased investment and facilitated licensing to continue contributing to the economy.

Furthermore, a study conducted by Kuncoro [37] in Magetan Regency revealed that the agricultural sector is the regional basis for development because it is the majority livelihood for the community and must be managed on target. In another study, Panjiputri [38] analyzed the Tangkallangka Region (Batang Regency, Pekalongan Regency, Pemalang Regency). The research found that Batang Regency excels in the agricultural, mining, and processing industry sectors. Pekalongan Regency has leading sectors in electricity, gas and clean water, hotels and restaurants, as well as transportation and communications. Pemalang Regency excels in the sectors of agriculture, mining and quarrying, trade, as well as hotels and restaurants.

Contrastingly, Rimet [39] found in a study of West Sumatra Province that the tourism sector is a leading sector attracting both local and foreign tourists. Meanwhile, Pakpahan et al. [40] discovered that the agricultural sector is the mainstay of East Aceh District, differing from the findings of Hamzah [41] in Bangka Belitung Province, who found that the manufacturing industry sector is a key supporter of economic development.

Based on explanations from various relevant literature, the development of leading sectors in an area, as the focus of local governments, is necessary to encourage better and more advanced economic development.

2.3 Leading sector development strategy

A strategy is a series of decisions and actions aimed at achieving both short-term and long-term goals within an organization [9]. It is further explained that a strategy is crafted based on the capabilities or resources that exist within an organization. To formulate an appropriate strategy, an organization needs to understand the comprehensive strategy formulation process [42]. In principle, the development of the strategy is adapted to the conditions, potential, capabilities, and needs of the organization by accommodating various interests, goals, and collaborations with all parties related to achieving organizational goals [43].

This research focuses on using SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to develop strategies. SWOT identifies strengths and weaknesses (internal), as well as opportunities and threats (external). It is expected to be a valuable tool for achieving goals [44]. Moreover, SWOT analysis requires leaders to find strategic compatibility between external opportunities and internal strengths, while mitigating external threats and internal weaknesses [45]. Given that SWOT is an acronym for the Strengths, Weaknesses, Opportunities, and Threats of an organization, all of these are strategic factors. Therefore, a SWOT analysis must identify organizational distinctive competencies, which are the specific skills and resources possessed by an organization and the superior ways they are utilized [46].

SWOT analysis has a close relationship with development goals. The application of SWOT analysis in development implementation can create economic stability across all sectors and spur optimal management of available resources. The most crucial analysis is how to maximize strengths and opportunities to mitigate weaknesses and threats for regional development.

Various researchers have conducted studies on SWOT analysis in supporting the development of leading sectors and selecting the best strategies in various countries. However, studies regarding the linkage of SWOT analysis with leading sector development strategies in underdeveloped regions and the selection of the best strategies are still limited. Therefore, these results will provide a new and distinct contribution to the application of SWOT analysis in developing leading sectors, as SWOT analysis examines the relationship between strengths and weaknesses to seize opportunities and avoid threats.

Numerous studies related to SWOT analysis have been conducted, including those for the tourism sector. First, Aspan et al. [47] developed a strategy for the tourism industry in Iran. They found that summer is the most prioritized factor among external factors, and the existence of unique entertainment venues like Amarg is recognized as the most effective and prioritized factor among internal factors. Second, Mondal and Haque [48] analyzed sustainable tourism development strategies in Bangladesh. Their findings suggest various WT (weakness-threat) strategies, including ensuring the safety and security of tourists, planning for sustainable economic benefits, implementing stringent environmental regulations for ecological sustainability, and infrastructure development.

Third, Zhao et al. [49] developed a tourism strategy in Samosir Regency. They suggest that the government needs to improve the quality of supporting facilities and infrastructure, increase the scale of tourism activities, promote attractions sustainably, develop a variety of product values for tourist attractions, involve the community and all interested parties in the management of attractions, and improve the competence of human resources for tourism.

Fourth, Abya et al. [50] drafted a strategy for sustainable ecotourism development in Rameswaram. Their findings indicate that the government should focus on weaknesses and opportunities that will reduce environmental impact and provide quality services. Fifth, Tambunan [51] studied the development of sustainable ecotourism in Lorestan Province. They found that cooperation between the government and the community was needed to promote the natural beauty of the lake as ecotourism both nationally and internationally.

Sixth, Mallick et al. [52] analyzed the development of entrepreneurship in the agriculture and agribusiness sector in Kazakhstan. They recommend that the government needs to implement price stabilization policies and programs to overcome the factors that hinder the growth and development of entrepreneurship.

Seventh, Asadpourian et al. [53] studied the development of SWOT as a strategy for e-commerce tourism based on big data experience in China. They found that the sequence for choosing a business development strategy in the context of big data for tourism electronics is: SO strategy, ST strategy, WO strategy, and WT strategy.

Furthermore, studies have also been conducted in the industrial sector. For instance, Kumari and Sharma [54] analyzed strategies for accelerating the growth of the satellite industry in Korea. They found that opportunity items have a high priority, so the government needs to establish a strategy in the public sector to encourage private business. Meanwhile, Li [55] investigated indigenous and foreign contractors in Nigeria. They found that foreign contractors have better resources than natives, and thus, they enjoy more opportunities than threats.

In another study, Li [55] researched the importance of recycling vehicles as an End of Life Vehicles (ELV) solution in developing countries. They found that the opportunities were considerable and the threats significant for all countries analyzed. While the SWOT analysis clearly identified the weaknesses and threats, it also revealed strengths and opportunities for recycling ELV in both developed and developing countries.

Additionally, Guo et al. [22] studied the advantages, disadvantages, opportunities, and threats to determine the rural development strategy in China. They suggested that the government needs to seize the national strategic opportunity to develop modern agriculture, improve the level of rural human capital, and cultivate the concept of ecological civilization.

Based on explanations from various relevant literature, this research aims to fill the gap in previous studies by analyzing strategies for developing leading sectors in underdeveloped areas using SWOT analysis. By applying SWOT, the best strategy results will be obtained, such as aggressive strategy, competitive strategy, conservative strategy, or defensive strategy. This optimal strategy will be implemented in the form of policies to encourage and accelerate development in the Kepulauan Mentawai Regency. If this policy proves effective, this research hopes that the Kepulauan Mentawai Regency will emerge from its underdeveloped area status in the future.

4.2 Priority strategy in the development of the Kepulauan Mentawai Regency Construction Sector

The selection of priority strategies for the development of the Construction sector is carried out by mapping the strengths of the Kepulauan Mentawai Regency which consists of 4 quadrants. Quadrant I: aggressive strategy; quadrant II: competitive strategy; quadrant III: conservative strategy; and quadrant IV: defensive strategy. The selection of this strategy is done by comparing internal strengths and weaknesses with external factors of opportunities and threats. Each weight score is added up. The result of the sum is used to determine which priority strategies will be implemented. Internal factors Weaknesses (W) and external factors Threats (T), the value is negative (-) because they are factors that can weaken the government of the Kepulauan Mentawai Regency. The result of the sum of the weighted scores of each internal and external factor are Strength (S): 4.60; Weakness (W): 4.32; Opportunity (O): 4.65; Threat (T): 4.45. Then, axis of X = S + W = 4.60 + (4.32)= 0.28, and axis of Y = O + T= 4.65 + (-4.45) = 0.21.

Based on the mapping Figure 1, the Kepulauan Mentawai Regency government is in quadrant I, namely aggressive strategy. In this case the Kepulauan Mentawai Regency is in an advantageous situation because it has the strength to take advantage of the opportunities that exist. So based on these results the government of the Kepulauan Mentawai Regency in developing the Construction sector chose the S-O strategy. The S-O strategy is a strategy that takes advantage of opportunities with existing strengths, so the strategy is to develop international scale marine tourism resorts; and developing landing facilities and processing of sand sea fisheries.

From the mapping results above, the development of the construction sector using the S-O approach is more dominant to be carried out so that it becomes the focus of attention for the Kepulauan Mentawai Regency local government. Local governments need to strengthen institutions or agencies related to licensing issues in the development of the construction sector. Therefore, awareness of the importance of an accurate strategy accompanied by appropriate policies will certainly affect the results of the development carried out by the Kepulauan Mentawai regional government.

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Figure 1. Mapping the strength of the Kepulauan Mentawai Regency Government in the development of the Construction Sector

Improving the quality of institutions can encourage legal certainty to become a trust for the community to be more aware of the importance of collaboration for regional progress. On the other hand, this condition also attracts investors to be able to invest their capital and is accompanied by monitoring, coaching, guidance to investors as well as incentives for both regional taxes and regional levies so that the progress of the tourism, transportation and fisheries sectors becomes the backbone of the community's economy and there is an increase in income in Kepulauan Mentawai Regency area.

In order for this strategy to be achieved, it is important to carry out cooperation and partnership programs with various parties such as legal institutions, community organizations or with other parties that can support development in the Kepulauan Mentawai Regency. In addition, the availability of quality human resources must be sought for the needs of strategic sectors in regional development, because if the unavailability of quality human resources will hamper productivity so that development targets are difficult to achieve.

The development of international scale sea tourism resorts as part of the S-O approach to developing the construction sector in the Kepulauan Mentawai Regency is to build resorts based on visitor needs. First, based on functional needs, namely building a resort as a temporary residence that can make visitors feel like they are at home or in their own environment so that they feel comfortable. The mass layout of the building is very concerned with the freedom of visitors to move, so that a very wide circulation space is created. Apart from that, there are also public spaces that can be used for joint outdoor events. Second, based on performance needs, namely building a resort that is designed to be back to nature without being touched by nature so that it can attract visitors who are happy with the beauty of nature but are reluctant to be touched by nature directly. To support the natural feeling in this resort, a concept is needed that can support this, namely a design that blends with the surrounding nature, so that visitors feel that they are in a natural environment full of beauty and with fresh air (free from pollution) but without touching nature. The period of building that emphasizes the concept of back to nature with materials used are natural materials, because Indonesia is in the wet tropics, there are several problems, including moss or fungus and also termites.

The development of landing facilities and marine fisheries processing which is also part of the S-O approach to developing the construction sector in the Kepulauan Mentawai Regency is to use the foundation structure and the form of a stilt structure using Expanded Polystyrene (EPS) material which has strength properties almost equivalent to concrete, but with a much lighter weight, so that the building load can be reduced, easy to clean, has micro-sized pores so that water particles cannot stick and are stored in the pores of the material so that the EPS material is resistant to moisture on floors, columns, beams, pedestals, as well as landing facilities walls and partitions. Furthermore, the use of steel material in the space truss structure and roof truss can respond to wind and humidity conditions because steel material is relatively more stable, even the most stable in response to high-pressure wind conditions and steel material is also relatively resistant to moisture which cannot rot.

The results of this study indicate that there are fundamental differences from previous researchers who examined the strategy for developing leading sectors. This study found that the leading sector development strategy in the Kepulauan Mentawai Regency used SWOT analysis with the S-O strategy. Previous researchers were still relatively limited in studying this matter in the Kepulauan Mentawai Regency.