Implications of Competitive Advantage Strategies in the Buying and Selling Used Iron

Abstract

This study aims to analyze and identify the competitive structure that forms the key success factors (KSFs) in the scrap metal trading industry, with open innovation as a mediating factor and its effect on competitive advantage. The research employs an explanatory method to explore the causal relationships between variables. Data were collected through questionnaires, direct interviews with business owners, managers, employees, and consumers in the scrap metal trading sector, as well as secondary sources such as articles, journals, online databases, libraries, and government agencies like the Ministry of Trade (Deperindag) and the Central Bureau of Statistics (BPS). The data collection techniques include literature review, interviews, and observations. Analytical methods employed in this study include descriptive analysis through company profiling, Porter's Five Forces model for industry competition analysis, and an assessment of open innovation as a mediating factor for competitive advantage. The findings reveal that key success factors contributing to competitive advantage in the scrap metal trading industry are economies of scale, marketing capabilities, access to capital, raw material supply, and technology utilization. The application of Porter's Five Forces, when mediated by open innovation, strengthens the relationship between open innovation and organizational strategy, ultimately leading to sustainable competitive advantage. Competitive advantage is enhanced by increased open innovation, which fosters organizational collaboration, adaptability, and the development of novel strategies. Through the implementation of open innovation, scrap metal trading companies can leverage diverse ideas and resources, enhancing competitiveness in dynamic market environments. Conclusion: The threat of new entrants in the scrap metal trading industry is low, while the bargaining power of suppliers and buyers is strong. The threat from substitute products is weak, and the rivalry among existing competitors is intense. Open innovation contributes to competitive advantage by promoting collaboration, encouraging adaptability, and supporting strategic innovation.