The Role of Business Enviromental and Strategy Alignment in the Optimization of Business Performance of Small Scale Manufacturing Companies in Indonesia

Lena Ellitan

This research was conducted to test whether a conceptual model of manufacturing strategy relevant when applied in different research settings, the small and medium manufacturing companies in Indonesia. The study involved eighty-eight small and medium scale manufacturing companies yielding response rate of 17.6%. The study generally indicates that environmental uncertainty has no significant effect on the choice of competitive strategy and manufacturing strategy in small and medium scale companies. The study also indicate that both cost leadership and differentiation strategy has a significant effect on the flexibility, cost leadership has a significant effect on quality, differentiation strategy has a significant effect on the quality, manufacturing strategy choices that focuses on cost is significantly influenced by the cost leadership strategy but not by a differentiation strategy, while the competitive strategy choices, both cost leadership and differentiation does not significantly effect delivery strategy. Competitive strategies simultaneously effect the financial performance, the partial cost leadership effects financial performance but differentiation does not effect financial performance.