ANALYSIS OF VALUE CREATION TOWARDS BUSINESS PERFORMANCE: A CASE STUDY OF A LOCAL BRAND: “THE LITTLE THINGS SHE NEEDS”

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By

Felicia Marcellina Sulaiman 13111048

BACHELOR’S DEGREE In

BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION AND HUMANITIES

SWISS GERMAN UNIVERSITY EduTown BSD City

Tangerang 15339 Indonesia

Revision after Thesis Defense on 11 August 2015

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Felicia Marcellina Sulaiman I hereby declare that this submission is my own work and to the best of my knowledge, it contains no material previously published or written by another person, nor material which to a substantial extent has been accepted for the award of any other degree or diploma at any educational institution, except where due acknowledgement is made in the thesis.

Felicia Marcellina Sulaiman

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Student Date

Approved by:

Nila K. Hidayat, S.E, MM

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Thesis Advisor Date

Dr. rer. nat. Linus Pasasa, S.Si, M.Si

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Thesis Co-Advisor Date

Prof. Eric Jos Nasution, MBA, MA., PhD

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Dean Date

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Felicia Marcellina Sulaiman ABSTRACT

ANALYSIS OF VALUE CREATION

TOWARDS LOCAL BRAND’S BUSINESS PERFORMANCE:

A CASE STUDY OF THE LITTLE THINGS SHE NEEDS

By

Felicia Marcellina Sulaiman Nila K. Hidayat, SE, MM Advisor

Dr. rer. nat. Linus Pasasa, S.Si, M.Si, Co-Advisor

SWISS GERMAN UNIVERSITY

The competition rate in Indonesia fashion industry is rapidly increasing. Companies selling fashion items like shoes and clothes have to create values to be unique for customers. The purpose of this study is to analyze value creation and the indicators involved in a local shoes brand: The Little Things She Needs and its implications towards business performance. It also analyzes SWOT of TLTSN and determines the suitable strategy to be pursued to face the growing market. This is a mixture of quantitative and qualitative research with both primary and secondary data from questionnaire distribution, company internal reports and in-depth interview with the operation and brand manager of TLTSN. Results indicate that value creation of TLTSN influences its business performance highly and among the four indicators proven to be influencing the value creation, service relationship seems to have the strongest influence. Based on the SWOT, IFE and EFE Matrix, TLTSN is already in a good position and is recommended to employ aggressive strategy to maximize the use of opportunities and enhance its business performance further.

Keywords: Value Creation, Business Performance, Fashion Industry, The Little Things She Needs, Shoes, Price, Location, Product Performance, Service Relationship, SWOT Analysis, IFE Matrix, EFE Matrix, Aggressive Strategy

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Felicia Marcellina Sulaiman DEDICATION

I dedicate this work to Jesus Christ and my loving family, especially my parents, Rudy Sulaiman and Lena, my sisters Claudia Margareta Sulaiman and Natashya Marvelia

Sulaiman, and grandma.

Thank you for always believing in me and supporting what I do.

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Felicia Marcellina Sulaiman ACKNOWLEDGEMENTS

First and foremost, I would like to thank God for I will never be what I am now without His abundant blessings. Secondly, I would like to thank my parents, Rudy Sulaiman and Lena, whose love and support have accompanied me during the peaks and pits of not only my thesis journey but also my life journey.

My sincerest appreciation to my Advisor Miss Nila Khrisnawati Hidayat, whose patience, guidance, advice and constructive criticism helped me truly during the whole thesis process. I also thank my co-Advisor, Mr. Linus Pasasa for teaching me the statistical analysis needed for my thesis completion. Also thanks to James Hunt for the thoughtful comments and advices, as well as the motivation.

I would also like to express my gratitude to Ms. Maria Clara Nadia and Mr. Tony Ibrahim from Metrox Group for providing of all the information and insights of the brand.

Bunch of thanks to my annoying sisters, Natashya Marvelia S for the random calls and asking me to sing on the phone while typing my thesis work, and Claudia Margareta S, for hugging and crying along with me, for buying me food when I cannot leave my laptop, and finally for making my bed when I have no time to.

To my dearest friends, Maria Ratih Ayu, Josephine Rigo, Annisa Anggraini, Irene Chandra, Prisca Natalia Ciputra, Stella Noverina, Stefanni Waisaka, and Giacinta Levi thanks for the constant support, opinion shared, and prayers. Thanks to Firlyana Wijaya for the meaningless whining and chats and to Bil Calvin plus Hernando Akaido for the endless curse of failing. I am sending love to all my classmates and SGU fellas!

Special thanks to Khairunnisa and Syiefa, for the late night Dunkin sessions, Benedictus Widy Andhika, for being clueless together on advisory sessions, Vincent Ing, for inconsistently making me want to drop out of university, always taking me out for eating and relieving, sometimes increasing my stress, Victor Edwin, for the constant sending of food photos, for replying my chats in less than 2 seconds, and for always making me laugh, and lastly Jerry Alfine, for the positive thoughts, vibes and spontaneous cheering up jokes.

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Felicia Marcellina Sulaiman TABLE OF CONTENTS

STATEMENT BY THE AUTHOR ... 2

ABSTRACT ... 3

DEDICATION ... 5

ACKNOWLEDGEMENTS ... 6

TABLE OF CONTENTS ... 7

LIST OF FIGURES ... 11

LIST OF TABLES ... 12

CHAPTER 1 – INTRODUCTION ... 13

1.1 Background ... 13

1.2 Research Problems ... 17

1.3 Research Questions ... 17

1.4 Research Purposes ... 18

1.5 Significance of The Study ... 18

1.6 Thesis Structure ... 19

CHAPTER 2 – LITERATURE REVIEW ... 20

2.1 Framework of Thinking ... 20

2.2 Value Creation ... 21

2.3 Price as Value Creation Dimension ... 24

2.4 Location in Co-Creation as Value Creation Dimension ... 26

2.5 Product performance as Value Creation Dimension ... 27

2.6 Service relationship as Value Creation Dimension ... 28

2.7 Business Performance ... 29

2.8 Sales Growth ... 30

2.9 Store Number Growth ... 30

2.10 Table of Previous Studies ... 31

2.11 Basis of Differences ... 33

2.12 Business Research Model ... 33

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2.14 Hypothesis... 34

CHAPTER 3 – RESEARCH METHODOLOGY ... 36

3.1 Research Process ... 36

3.2 Type of Study ... 37

3.3 Type of Data and Collection Method ... 37

3.4 Population and Sample ... 38

3.5 Data Analysis Technique ... 39

3.5.1 Pre-Testing ... 39

3.5.2 Post-Testing ... 39

3.5.3 Validity and Reliability Test ... 39

3.5.4 Correlation Coefficient ... 41

3.5.5 Hypothesis Testing... 42

3.5.6 SEM (Structural Equation Modelling) ... 43

3.5.7 Path Analysis and Diagram ... 44

3.5.8 Operationalization of Variables ... 45

CHAPTER 4 – RESULTS AND DISCUSSIONS... 47

4.1 Company Background ... 47

4.1.1 Products... 48

4.1.2 Target Market... 48

4.1.3 Company Values ... 48

4.2 Respondent Profile ... 49

4.2.1 Gender ... 49

4.2.2 Age ... 50

4.2.3 Current Education ... 50

4.2.4 Occupation ... 51

4.2.5 Monthly Income and Allowance ... 51

4.2.6 Frequency of Purchase per Month ... 52

4.2.7 Source of Information about The Little Things She Needs ... 52

4.3 Validity and Reliability Result... 53

4.3.1 Summary of Pre-Test ... 53

4.3.2 Summary of Post-Test... 54

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4.4 Structural Equation Modeling Analysis ... 55

4.4.1 Path Diagram ... 55

4.4.2 Measurement Model Analysis ... 56

4.4.3 Path Diagram Interpretation ... 56

4.5 Hypothesis Analysis... 57

4.5.1 Hypothesis #1... 57

4.6 Summary of Hypothesis Analysis ... 62

4.7 SWOT Matrix of ‘The Little Things She Needs’ ... 63

4.7.1 Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis ... 64

4.7.2 Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE) Matrices 66 4.8 Implementation Analysis ... 69

4.8.1 Market Development Strategy ... 70

4.8.2 Market Penetration Strategy ... 71

4.8.3 Product Development Strategy ... 72

CHAPTER 5 – CONCLUSIONS AND RECOMMENDATIONS ... 74

5.1 Conclusion ... 74

5.1.1 Highlights on Respondents’ Profile ... 74

5.1.2 The Most Influencing Factor of Value Creation Towards Business Performance of The Little Things She Needs ... 75

5.1.3 Aggressive Strategy to Enhance Value Creation Towards Business Performance of The Little Things She Needs ... 76

5.2 Recommendations ... 77

5.2.1 For Managerial Implications ... 77

5.2.2 For Future Academic Research ... 80

GLOSSARY ... 81

REFERENCES ... 83

APPENDICES ... 92

APPENDIX 1 – Pearson Table ... 92

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APPENDIX 3 – IN-DEPTH INTERVIEW ... 99

APPENDIX 4 – PRE-TEST RESULTS ... 102

APPENDIX 5 – POST–TEST RESULTS ... 104

APPENDIX 6 - FURTHER INFORMATION OF TLTSN ... 105

CURRICULUM VITAE ... 108