Optimization of business strategy in improving the efficiency of business capital use

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Abstract

Indonesia is the fourth largest coffee-producing country in the world after Brazil, Vietnam, and Colombia (Richardson et al., 2023). Seeing this opportunity is widely used by business people in making coffee shops (Fahmi & Savira, 2023). This study aims to see the level of efficiency produced by coffee shops with data envelopment analysis (DEA) techniques. This analysis uses input variables, namely labor costs, raw material costs, overall capital, and the amount of labor, and output variables, namely gross profit, and net profit. In DEA using variable return scale (VRS) assumptions where the addition of inputs is not necessarily offset by the output. The sample used was 67 coffee shops in Soloraya. The results of the analysis show that 22 coffee shops have experienced a 100 percent efficiency level while 45 coffee shops have not experienced a 100 percent efficiency level, meaning that those that have not reached 100 percent need improvement in the use of inputs and improved output targets and also benchmarking to make adjustments to their business activities. Managers find it easier to make decisions about whether the business will be saved or increased targets so DEA techniques are more suitable for business people to use in making a decision.

Keywords: Efficiency, Input, Output, DEA

Authors’ individual contribution: Conceptualization — S.T.U.; Methodology — S.T.U.; Formal Analysis — S.T.U.; Data Curation — W.M.; Validation — W.M.; Writing — Original Draft — S.T.U.; Writing — Review & Editing — W.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M200, M210, M290

Received: 02.09.2023
Accepted: 13.09.2024
Published online: 17.09.2024

How to cite this paper: Utomo, S. T., & Mawardi, W. (2024). Optimization of business strategy in improving the efficiency of business capital use. Corporate & Business Strategy Review, 5(4), 76–89. https://doi.org/10.22495/cbsrv5i4art7